Basic income: The Solution to Debt in The
Netherlands
Policy Paper
Max de Haas van Dorsser
V4A
Ms. de Poorter
5-aug-24
,Table of contents
Inhoudsopgave
Table of contents................................................................................................................................................. 2
The current problem........................................................................................................................................... 3
Basic income: the solution................................................................................................................................... 5
Previous Successes......................................................................................................................................................6
Basic income in Finland experiment...........................................................................................................................6
Basic income in India experiment...............................................................................................................................6
Political ideology.........................................................................................................................................................8
Tasks of the welfare state (which one of four)...........................................................................................................9
Welfare triangle........................................................................................................................................................10
The Government’s role and the price to pay............................................................................................................11
Effects on social cohesion.........................................................................................................................................13
Effects on social justice...................................................................................................................................... 14
Conclusion........................................................................................................................................................ 14
References........................................................................................................................................................ 15
2
, The current problem
There is a major problem of debt in the Netherlands. In 2021, there were about 2.64 million households
in the Netherlands that had debt (Centraal Bureau voor de Statistiek, 2023). To put this in perspective,
there were a total of 8.1 million households in the Netherlands in 2020, so 33.3% of the households had
any debt in 20201.
The problem of debt has evolved due to many factors. To name some:
o High inflation rates. In 2021, there was an average inflation of 2.7%.
While the average salary increased with 2.1%. This .6% difference
might sound neglectable. But, after 50 years bearing this difference,
you can buy only 74% of what you used to 2. In the graph, you can
see how inflation has almost always been higher than the average
increase in wages. This creates an effect where basic needs become
more expensive and the balance on your bank account doesn’t grow
as fast as the price of goods. (Centraal Bureau voor de Statistiek,
2022)
o Another process, known as the wage-price spiral, describes
how higher wages more demand for goods higher prices demand for higher
wages higher production costs higher prices demand for higher wages etc.
(Banton, 2024)
o No overview. According to Nibud, 75% of Dutch citizens has no clear overview of their financial
situation. (Het Nibud (Nationaal Instituut Voor Budgetvoorlichting), 2024)
o Compensation. Some people start doing expensive things when they have debt, like gambling,
smoking, etc. This causes them to move in a negative spiral only accumulating more debt.
(Oorzaken van Schulden | SchuldHulpMaatje, z.d.-b)
o Shame. A lot of people find their situation shameful and do not dare to ask for help. This causes
them to remain in debt and are not able to solve this problem. (Oorzaken van Schulden |
SchuldHulpMaatje, z.d.-b)
Debt is often bought by companies for a premium, who try to earn money via people’s debt 3. They often
pump-up the costs so the debt increases very fast. When the amount of debt has reached a certain level,
they take a percentage of the individual’s salary. The companies have created a business model out of
this and earn very much money with it. (3Doc | NPO StArt, z.d.)
The problem of debt is a social issue since:
o It effects a lot of people in the Netherlands. 33% of the households in the Netherlands has a
type of debt. This is about 6 million people, so the issue affects a lot of people. (Cijfers en Feiten
Over de Relatie Tussen Armoede en Gezondheid, z.d.)
1
Excluding mortgages
2
Calculation: 0.99450 x 100% = 74%
3
This is done by debt collection agency’s.
3
Netherlands
Policy Paper
Max de Haas van Dorsser
V4A
Ms. de Poorter
5-aug-24
,Table of contents
Inhoudsopgave
Table of contents................................................................................................................................................. 2
The current problem........................................................................................................................................... 3
Basic income: the solution................................................................................................................................... 5
Previous Successes......................................................................................................................................................6
Basic income in Finland experiment...........................................................................................................................6
Basic income in India experiment...............................................................................................................................6
Political ideology.........................................................................................................................................................8
Tasks of the welfare state (which one of four)...........................................................................................................9
Welfare triangle........................................................................................................................................................10
The Government’s role and the price to pay............................................................................................................11
Effects on social cohesion.........................................................................................................................................13
Effects on social justice...................................................................................................................................... 14
Conclusion........................................................................................................................................................ 14
References........................................................................................................................................................ 15
2
, The current problem
There is a major problem of debt in the Netherlands. In 2021, there were about 2.64 million households
in the Netherlands that had debt (Centraal Bureau voor de Statistiek, 2023). To put this in perspective,
there were a total of 8.1 million households in the Netherlands in 2020, so 33.3% of the households had
any debt in 20201.
The problem of debt has evolved due to many factors. To name some:
o High inflation rates. In 2021, there was an average inflation of 2.7%.
While the average salary increased with 2.1%. This .6% difference
might sound neglectable. But, after 50 years bearing this difference,
you can buy only 74% of what you used to 2. In the graph, you can
see how inflation has almost always been higher than the average
increase in wages. This creates an effect where basic needs become
more expensive and the balance on your bank account doesn’t grow
as fast as the price of goods. (Centraal Bureau voor de Statistiek,
2022)
o Another process, known as the wage-price spiral, describes
how higher wages more demand for goods higher prices demand for higher
wages higher production costs higher prices demand for higher wages etc.
(Banton, 2024)
o No overview. According to Nibud, 75% of Dutch citizens has no clear overview of their financial
situation. (Het Nibud (Nationaal Instituut Voor Budgetvoorlichting), 2024)
o Compensation. Some people start doing expensive things when they have debt, like gambling,
smoking, etc. This causes them to move in a negative spiral only accumulating more debt.
(Oorzaken van Schulden | SchuldHulpMaatje, z.d.-b)
o Shame. A lot of people find their situation shameful and do not dare to ask for help. This causes
them to remain in debt and are not able to solve this problem. (Oorzaken van Schulden |
SchuldHulpMaatje, z.d.-b)
Debt is often bought by companies for a premium, who try to earn money via people’s debt 3. They often
pump-up the costs so the debt increases very fast. When the amount of debt has reached a certain level,
they take a percentage of the individual’s salary. The companies have created a business model out of
this and earn very much money with it. (3Doc | NPO StArt, z.d.)
The problem of debt is a social issue since:
o It effects a lot of people in the Netherlands. 33% of the households in the Netherlands has a
type of debt. This is about 6 million people, so the issue affects a lot of people. (Cijfers en Feiten
Over de Relatie Tussen Armoede en Gezondheid, z.d.)
1
Excluding mortgages
2
Calculation: 0.99450 x 100% = 74%
3
This is done by debt collection agency’s.
3
