Opinion Han de Jong
Today at 10:00 a.m – Han de Jong
Apart from my father, who was a confectioner, all my ancestors are farmers. This perhaps explains my sympathy for the farmers, all economic considerations are more important to me. Our agricultural sector is very productive, we are one of the largest exporters of food. There is a lot to be done about that. Recently I came across a tweet where someone wondered why we as a small country want to be such a big food producer and exporter. At least the twitterer didn’t want that and thought we should stop. Down with the peasants. Incomprehensible!
Why do we want to be a major agricultural producer and exporter? It seems pretty obvious to me. Apparently we are exceptionally good at that. It is an important part of our revenue model. It is essential for our standard of living to have economic activities that create a lot of value. People who have absolutely nothing to do with agriculture also benefit, although they don’t seem to realize it at all.
Let me illustrate with an example about hairdressers. The hairdressers in our country and their colleagues, e.g. Peru, Tanzania or Myanmar, pretty much all do the same thing: they cut their customers’ hair, although we probably make more of a fuss about it. Even so, our hairdressers have a higher standard of living than those in the countries mentioned. It is not because they cut better or faster, but because we create so much more value in the rest of the economy than the other countries. We can pay hairdressers more. We have to, because otherwise there is no one here who will practice that profession, and we still want haircuts. However, there is no doubt: the high standard of living of our hairdressers compared to other places in the world is due to the higher earning power of our economy as a whole, thanks in part to our agricultural sector.
I can also illustrate it in another way. How high do you think our standard of living would be if employment in our country consisted exclusively of hairdressers and, for example, civil servants? You can of course say that we don’t really need the agricultural sector as a revenue model, because we have other revenue models. That is true, but I notice that we are not very frugal with the other revenue models either.
Also other earning models in the damn corner
Before the 2008-2009 financial crisis, we had a large banking sector that spoke internationally. This resulted in a lot of well-paid, high-quality employment. But we no longer wanted that, and what was once the jewel of our banking sector is now small, majority state-owned and the target of a French bank takeover. Many jobs have disappeared. We had already significantly reduced the asset management industry, entirely voluntarily, by gradually handing over the management of our phenomenal Dutch pension pot to foreigners. Even our asset managers have fallen into foreign hands. ABN Amro Asset Management, meanwhile, has been downsized by BNP Paribas, Robeco is Japanese and NNIP is part of Goldman Sachs.
We also see giants such as Unilever and Shell disappearing. “Cleaning up is nice” I hear some people think, while I think “there are many well-paid jobs again”. Who can pay €50 for a wash and cut? How on earth are our hairdressers? DSM’s departure is the latest low point in this sad record. There are of course also new revenue models. But don’t forget that Adyen has just over 2,000 employees and ASML has about 32,000, spread over more than 60 locations around the world.
It is not always easy to see all macroeconomic connections. But it is clear: everyone’s standard of living depends on a country’s overall earning capacity. However, due to envy and the tendency to shoot anyone who sticks their head above the ground, we are constantly limiting this revenue model. I say: long live the agricultural sector, give farmers space. Do it for the barbers and officials.
This column by Han de Jong comes from Investmentofficer.com.
Han de Jong
Han de Jong is a former chief economist at ABN Amro and now resident economist at, among others, BNR Nieuwsradio. His comments can also be found at Crystalcleareconomics.nl
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