Harry Geels: ASML government aid is a nice example of corporatocracy

April 2, 2024

^{This column was originally written in Dutch. This is an English translation.}

By Harry Geels

Under pressure from ASML, which is considering leaving the Netherlands, the government will invest billions in the Eindhoven region. This is not just an ad hoc policy based on a threat, it is yet another proof that we live in a corporatocracy.

Every coin has two sides. This also applies to the outgoing cabinet's plan to invest approximately €2.5 billion in the Eindhoven region, following a threat from ASML. On the one hand, it is good that the government want to invest in infrastructure, housing, education, and possibly also tackle tax increases on businesses. On the other hand, there are four reasons why such a support plan is not a good idea. Let's list these reasons and then conclude with a salient political detail.

1) The plan is ad hoc

The first reason why the plan is dubious is that it is drawn up ad hoc. Of course, it should not be an issue at all that companies want to leave the Netherlands. If our education, our infrastructure (roads and energy), our residential housing, our legal (property) protection and our trade agreements with other countries were perfectly arranged, no bona fide company would want to leave the Netherlands. But that's where the shoe pinches. Things are no longer going so well in many of the above areas and the Netherlands is starting to lose its top position in the world.

2) It's a response to threats

Although the well-known proverb 'barking dogs don't bite' states that we should probably not make too much of a fuss about ASML's threats, it is rarely or never a good thing to respond to threats. It sets a precedent, it affects the autonomy of the government and it can facilitate 'from bad to worse'. As stated earlier, the Netherlands must be a country in which companies would want to (continue to) establish themselves. Responding to threats is often a result of lack of strength. The Dutch government should care about this.

3) It leads to 'homeland economics'

Serving the interests of the large internationals fits within the current economic ideal of 'homeland economics', where regions (and countries) want to protect their own companies, free markets are under pressure and the large regions in the world (China, EU and US) mainly want to become autonomous, so that they are not dependent on each other in times of crisis. As argued earlier, homeland economics is a disastrous path. Economically speaking, this goes at the expense of prosperity on a global scale. Furthermore, this increases government interference, which leads to more inefficiencies in the economy.

4) It supports corporatocracy

Fourthly, with this aid, the government mainly supports large corporates, which is at the expense of the level playing field between large and small companies. Of course, (small) suppliers also benefit, but they do not have the tax privileges of the large companies and increasingly have to negotiate with increasingly larger corporates as customers. Corporatocracy, also sometimes described as 'corporate welfare state' or 'corporate socialism,' is a system that supports large companies (and their employees and shareholders) at the expense of other parts of society.

Salient political detail

We could see the support plan as a form of realpolitik, but it rather falls under the heading 'caving in to large corporates that can more easily plan fiscal and production-wise around the world than smaller companies'. It is notable that GroenLinks-PvdA and D66 have also endorsed the support plan, which once again indicates that the traditional left-right division does not exist.

Finally, the government is there to regulate matters that the market finds difficult to address, such as infrastructure, police, justice and the military. That is why it is a good idea that the government wants to invest in education and roads. Of course, this should not only be done in the Eindhoven region. And for such investments, we all have to pay our share in the form of taxes. International tax planning, often applied by large corporates, is therefore out of the question, because it undermines solidarity in society, and tax morale elsewhere in society.

This article contains a personal opinion from Harry Geels

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