The roots of Dutch frugality: the role of public choice theory in Dutch budgetary policy

Abstract

ABSTRACT As a result of the economic fallout of the corona-epidemic, European politics is again in turmoil. Old controversies and tensions between northern and southern member states have resurfaced. The Netherlands has positioned itself as a controversial leader of northern opposition to European debt-financing, while blaming southern member states for their lack of reserves. Ever since the European debt crisis, scholars have been puzzled by the moralistic tone and strict, rule-based nature of austerity policies enforced by the Eurogroup. There has been ample discussion of German ordoliberalism as a crucial influence on the European austerity policies. The case of the Netherlands, we argue in this paper, points in a different direction. Dutch fiscal conservatism can be traced back to the market-oriented shift in the 1980s, and the Dutch uptake of Anglo-American public choice theory, which dates all the way back to the post-war period.