The Netherlands

The last sentence of our 2022 Key Challenges text was: “Time will tell whether the Rutte IV coalition agreement is just throwing money at a knot of intertwined problems, or will represent a tipping point in moving away from a traditional growth-based to a life- and truly prosperity-based mode of governance.” At the moment of writing, a month after the shocking win of the extreme-rightist PVV, flanked by romantic-conservative newcomers like the Farmer-Citizen Movement and New Social Contract, it appears that the Rutte IV policy innovation of reluctantly and modestly starting a transition path toward a more sustainable economy, society and ecology finds itself mired in a valley of death instead of becoming a tipping point.

This predicament stems from a strong disconnect between policy and implementation that began during the 1990s and continued until the childcare benefit scandal caused a shift in mindset and mood. In the 1990s, the national government was turned into a policy factory, and agencies like the Employee Insurance Agency (Uitvoeringsdienst Werknemersverzekeringen, UWV) and the Social Insurance Bank (Sociale Verzekeringsbank, SVB) became implementation hubs for social security policies without scope for administrative discretion. Provincial and local governments also came to be seen by the central government as pieces in an implementation apparatus. The Netherlands suffers from too much planning and too little execution power. The gap between promises and expectations and a disappointing reality casts a shadow over weak citizen engagement, and testifies to governmental inefficacy and soured relations between national and subnational government tiers. Within considerable segments of the population, this has fostered a sense of being unheard and disregarded, pushing some citizens into indifference and others into active resistance. The disconnect manifests itself in contemporary challenges that span the gamut from preserving earning power to grappling with labor market shortages and navigating competing claims on increasingly scarce labor resources, physical space, housing and natural spaces.

Central to this quandary is the reluctance by leading politicians, the business community and trade union leaders to unambiguously endorse an overarching vision that beckons the nation toward a sustainable future. In spite of its “poldering” tradition, the country badly needs a Rhineland Model 2.0 that would allow for collaborative efforts between social partners and political entities instead of a competitive scramble over limited resources.

Urgent priorities loom on the horizon, demanding immediate attention and decisive action within the next five years. At the forefront is the imperative to reform the labor market, making it more resilient in the face of multifaceted challenges. Simultaneously, strategic economic choices must be made, with the goal of steering the country’s trajectory toward innovation and sustainable investment. Ensuring a reliable supply of electricity must be a linchpin in this strategy, as without a robust electricity supply, sustainability goals cannot be achieved.

Yet woven into these immediate concerns is a broader call for a paradigm shift in how technology and society are perceived and interwoven into the fabric of governance. The prevailing bias of focusing solely on sustainability-enhancing technologies must be acknowledged and dismantled, as the challenges posed by climate change demand a more equitable and synergistic approach. Farming is not just another economic activity to be judged by its efficiency alone. It involves people, families, land use and the attractiveness of landscapes. To reach broad-based prosperity – a guiding principle – policymakers must grasp that climate, energy and biodiversity policies; labor market reforms; and the overall well-being of the populace are all interconnected.

Despite the articulation of these priorities, public discontent is growing. Dissatisfaction with the pace of progress, particularly in the realm of labor market reforms, has strained relations within the polder – the traditional Dutch model of consultation and consensus-building. The remedy, it seems, lies in solutions that actively involve relevant segments of the people in the decision-making process, ensuring that citizens’ voices help shape policies that affect their lives.

An economic transition appears necessary, shedding the reliance on industries tethered to cheap migrant labor. What is needed is increased productivity and a strategic pivot toward sustainable technologies. The Netherlands – traditionally known for letting “a thousand flowers bloom” – must shift from the familiar terrain of tomatoes and greenhouses to the uncharted territories of green chemistry and quantum computers. This transformative journey necessitates robust government intervention that keeps a focus on the long term and transcends short-term interests.

A kind of national technology strategy can serve as a beacon in this transformative journey, in which key technologies that hold the potential to catapult Dutch industries into the future are identified. Fuel cells, artificial intelligence and robots are not merely tools of progress, but can serve as pillars of an active industrial policy aimed at preserving jobs and prosperity while avoiding excessive dependence on other nations.

Despite the veneer of economic success, a more nuanced examination reveals underlying fissures. Scarcity, whether in terms of capital, physical space, energy or human resources, casts a long shadow over the country’s purported prosperity. Geopolitical challenges further complicate matters, as economic power is wielded politically, adversely impacting world trade. The Netherlands, a trading nation, finds itself disproportionately affected by these geopolitical shifts.

In this complex milieu, the urgent need to address climate change takes center stage. The traditional Dutch approach, characterized by letting a myriad of initiatives flourish and following the likely winner, must now be tempered with a strategic focus on sustainability. The economic landscape, while seemingly robust, demands a closer look, with recognition of the interconnected challenges of resource scarcity, geopolitical intricacies and the imperatives of transitioning to a sustainable future.

In the quest for a sustainable future, the Netherlands finds itself at a crossroads. The echoes of discontent and the challenges at hand demand transformative action. As the nation contemplates its trajectory over the next 20 or 40 years, the imperative is not just to let a thousand flowers bloom, but rather to cultivate a garden that can thrive in the face of climate change, foster inclusive prosperity and navigate the complexities of a rapidly evolving global landscape. But at precisely this moment, political power has come back into the hands of people who advocate a narrow Dutch national interest – “Put the Dutch back on #1” – while being inspired by a pastoral past that never was, and disparaging serious consideration of international and geopolitical developments. It appears that the country will need a political Houdini to help it escape from the current moment’s “valley of death.”