The core part of the method is the texts. Words and grammar are acquired by reading and listening to the texts.

 The texts provide plenty of information about the Netherlands and cover subjects that are of importance to foreigners. In a short space of time course participants learn the most frequently used words so that they are quickly able to talk about all kinds of matters.

 The actual lessons revolve mainly around conversation training pertaining to the learned texts.

 Apart from the conversation training, much attention is devoted to the training of listening skills.

 From the very beginning all the important grammar is included.

 Grammar is explained using examples and without the use of complicated terminology.

The extensive exercise material is comprehensive and varied.

www.learndutch.sg

In the margins of this website, we present actual information about the situation in The Netherlands. For some time, the Dutch government seemed to be quite optimistic about the effects of the financial crisis with regard to their own country, as if there would be some magic formula to keep the crisis at a safe distance. By now, everyone knows that reality is hitting hard. Are there any practicable ideas to save Holland?

 

A rescue plan for the Dutch economy

Published: 3 March 2009, NRC Handelsblad, International Edition.

 

By Lans Bovenberg, Sweder van Wijnbergen, Bas Jacobs, Arnoud Boot and Willem Buiter

 

Political bickering in the Netherlands about giving a 'stimulus' or 'cutting deficits' is pointless. The challenge is to combine both elements without each undermining the other, say five prominent economists.

 

The Bureau for Economic Policy Analysis (CPB) has now come round: the Dutch economic growth for 2009 is estimated at -3.5, a unique contraction in the post-war era. For 2010, the CPB predicts a contraction of.25 percent. This is optimistic, since financial crises tend to last much longer than a year. At the same time, according to the CPB, unemployment will increase dramatically to about 9 percent of the working population in 2010, and may rise even further after that. Government finances will be thrown off balance with budget deficits of 3 percent in 2009 and 5.5 percent in 2010.

 

The first political reactions have been predictable and, from an economic perspective, outright foolish. The Socialist Party (SP) and the trade unions want to deploy the stimulus machine in full force as if deficits do not matter at all. The right-wing liberal party (VVD) only wants to make heavy cutbacks, but looks the other way when asked how and where. The employers are up for anything, as long as large companies receive state support. The government is awaiting an official report by civil servants and confining itself to party political skirmishes in the meantime.

 

Our message is that bickering about stimulus versus restoring budget balance is pointless. A contraction of 3.5 percent means that a stimulus is necessary. But a deficit of 5.5 percent also means that fiscal cutbacks cannot be avoided. The challenge is how to combine both elements without them undermining each other.

 

Historical insight

 

The VVD has forgotten the historical lessons of the depression of the 1930s. Governments attempted at the time to keep their budgets in balance by large cutbacks. They failed to keep the financial system afloat, consequently plunging the economy into the abyss. To now demand that the fiscal deficit not exceed 2 percent shows a fatal lack of historical insight. Continuing to ruin the economy can only be detrimental to government finances. With its insistence on cutbacks alone the VVD is shooting itself in the foot.

 

At the same time, the raw Keynesianism of the 1970s championed by the Socialist Party is no remedy either. Countries have been working for decades to clean up the ruins of this approach. The Dutch government has taken on huge financial risks to bail out banks and restore confidence in the payment system. The higher financial risks and the rising public debt are already pushing the risk premiums on Dutch government securities upwards. Writing blank checks, without any indication of who will ultimately foot the bill, will further erode the fragile confidence in the economy. Stimulus measures do not work if households and businesses expect that they will be hard hit by future cutbacks or tax increases as a result of the government finances getting out of hand. Consequently the SP is also shooting itself in the foot.

 

The small budget surplus of 0.9 percent of gross domestic product (GDP) in 2008 will turn into a deficit of 5.4 percent of GDP in 2010 if policy remains unchanged. That is a stimulus of no less than 6.3 percent of GDP in two years time, or about 38 billion euros, before any policy measures. Automatic stabilisers, is what economists call this. In order to prevent economic collapse, these automatic stabilisers must be allowed to have their effect as much as possible, perhaps in combination with temporary, well-aimed additional stimuli, but more about that later.

 

However, the only way to restore economic confidence is to keep government finances under control in the long term. If this is to be credible, it requires irreversible steps now.

 

Measures such as speeding up planned investment projects on the municipal and provincial level, and stimulating private residential construction can be carried out quickly. They have a minimal leakage effect to other countries and are therefore a good idea. But the idea that large programmes can avert the recession is an illusion. Even Obama will not manage that because the automatic stabilisers in the US are weaker than in the Netherlands because of the US's smaller federal government and minimal social security.

 

Credible and irreversible

 

The Dutch government must take measures that strengthen the government finances in the long term, without harmful effects on the economy now. What could be considered is raising the retirement age, allowing less pension accrual per year for supplementary pensions, making general old age pension pay-outs subject to higher tax and gradually reducing the tax bonus for a stay-at-home spouse.

 

And then there is the problem of mortgage interest relief, one of the greatest distortions in the Dutch tax system. Part of the uncertainty now hanging over the housing market stems from the political disagreement on fiscal incentives for homeowners.

 

The large political parties must find a credible way to commit to a long-term transition regime for a better functioning rental and buying market and the related fiscal aspects. But such far-reaching reforms cannot be negotiated in a few weeks time. Moreover, because of the difficult position of the banks, mortgage interest relief can only be handled in a way that minimises the initial effects on house prices. This in order to prevent a drastic downgrading of the banking sector's mortgage portfolios for which houses are the collateral.

 

It is crucial that new mortgages are not discriminated against, for the simple reason that it is the people taking new mortgages that are buying homes. So how they are treated fiscally determines the price effect. If those taking out new mortgages can share in a thirty-year transition regime instead of limiting this transition scheme to existing mortgages, the price shock will remain limited and banks will be hit less drastically at the moment by drops in the value of the collateral of their outstanding mortgages.

 

It is of vital importance that these measures be credible and irreversible. Only if politicians are willing to bear the political pain now of future austerity can the government make fewer cutbacks at the moment.

 

The blow to the economy and the labour market will be less severe if trade unions and employers also shoulder their social responsibility. The largest part of our production is destined for export, so our competitiveness is essential for early recovery. The unions must therefore moderate wages, even if existing collective labour agreements must be revised to do so. The government must set a good example in this by freezing benefits and the salaries of civil servants.

 

Employers must stop begging for state support. Support only delays necessary adjustments and damages the government finances. And protectionism, in any form whatsoever, is damaging to a trading nation like the Netherlands.

 

Quarelling politicians do the country the worst disservice imaginable at the moment. It is not the first time that the prescription from the left (stimulus without debt reorganisation) and the right (reorganisation without stimulus) would result in the same thing: a ruined economy and a ruined treasury. Nor is failing to take action an option. The only credible way out of the malaise is stimulating now, and restoring fiscal balance in the long term. But the credibility of efforts to restore fiscal balance calls for irreversible steps now.

 

 

Authors:

 

Lans Bovenberg (50) is a prominent economist of the Christian Democratic party (CDA). He devised the life course savings scheme and is an adviser to prime minister Jan Peter Balkenende. He is professor of economics at the University of Tilburg. He won the prestigious Spinoza prize in 2003.

 

Sweder van Wijnbergen (57) worked for the World Bank in Mexico and Poland, was involved in market liberalisation as secretary general at the ministry of economic affairs, and is now professor of economics in Amsterdam. He is a member of the Dutch Labour party (PvdA).

 

Bas Jacobs (35) is professor of government finances at the Erasmus University in Rotterdam. In the past he has worked at universities in Amsterdam and Tilburg and at the Bureau for Economic Policy Analysis (CPB).

 

Arnoud Boot (49) is professor of financial markets in Amsterdam, an adviser to the Central Bank of Sweden, deputy crown-appointed member of the Social and Economic Council (SER) and member of the Bank Council.

 

Willem Buiter (59) is professor at the London School of Economics and writes an economics blog, Maverecon, for the Financial Times. In the past, he has worked for the Bank of England. Buiter is a member of the PvdA and gave the Den Uyl lecture in 2008.