Give farmers space, for hairdressers and officials

Apart from my father who was a pastry chef, all my ancestry is made up of farmers. Perhaps that explains my sympathy for the peasants, 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 much to do about that. Recently I came across a tweet where someone wondered why we, as a small country, want to be such a major food producer and exporter. In any case, the twitterer didn't want this and thought we should stop. Down with the farmers. Incomprehensible!

Why we would like to be a major agricultural producer and exporter? It seems quite obvious to me. Apparently we are exceptionally good at that. It is an important part of our revenue model. It is crucial to our standard of living to have economic activities that create a lot of value. People who have absolutely nothing to do with the agricultural sector also benefit from it, although they apparently do not realize it at all.

Hairdressers
Let me illustrate that with an example about hairdressers. The hairdressers in our country and their colleagues, in say Peru, Tanzania or Myanmar, essentially all do the same thing: they cut the hair of their customers, although we probably have more fuss around it. Yet our hairdressers have a higher standard of living than those in the countries mentioned. This is not because they cut better or faster, but because we create so much more value in the rest of the economy than those other countries. We can pay hairdressers more. We have to, because otherwise nobody here wants to practice that profession and we still want to be cut. However, there is no doubt: the high standard of living of our hairdressers compared to elsewhere in the world is due to the higher earning capacity 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 solely of hairdressers and, for example, civil servants? Of course you could 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 note that we are not very frugal with those other revenue models either.

Also other earning models in the damn corner
Before the financial crisis of 2008-2009, we had a large banking sector that counted internationally. This resulted in a lot of high-quality, well-paid employment. But we didn't want that anymore and what was once the jewel of our banking sector is now small, majority state-owned and the target of a takeover by a French bank. A lot of jobs have disappeared. We had already significantly reduced the asset management industry, completely voluntarily, by gradually leaving the management of our phenomenal Dutch pension pot to foreigners. Even our asset managers have fallen into foreign hands. ABN Amro Asset Management has meanwhile been downsized by BNP Paribas, Robeco is Japanese and NNIP is part of Goldman Sachs.

We also see giants like Unilever and Shell leaving. "Cleaned up is neat" I hear some people think, while I think "there go a lot of well-paid jobs again". Who can pay €50 for a wash and haircut? How on earth is that with our hairdressers? The departure of DSM is the latest low point in this sad summary. Of course, there are also new revenue models. But don't forget that Adyen has just over 2.000 employees and ASML has about 32.000, spread across 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 total earning capacity. However, because of envy and the tendency to shoot anyone who sticks their head above the ground, we constantly limit that revenue model. I say: long live the agricultural sector, give farmers space. Do it for the barbers and the officials.

This column by Han de Jong comes from investmentofficer.com.

Hans de Jong

Han de Jong is a former chief economist at ABN Amro and now a resident economist at BNR Nieuwsradio, among others. His comments can also be found on Crystalcleareconomics.nl

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