Speech by Minister of Finance Wopke Hoekstra at the dies natalis 2019 of the Erasmus University Rotterdam
Speech by the Minister of Finance, Wopke Hoekstra, at the Dies Natalis of Erasmus University Rotterdam, 8 November 2019. The spoken word counts.
Ladies and gentlemen,
We’ve just watched a wonderful Polygoon news item: fifty years ago, Jan Tinbergen was joint recipient of the very first Nobel Prize in Economics. The first, and so far the only Dutch person to receive this honour. But frankly speaking, the Committee showed great foresight, for Tinbergen’s work has lost none of its relevance today.
We are marking this anniversary with the ‘Tinbergen year’. And of course we are celebrating here in Rotterdam, where Tinbergen taught for many years at the Netherlands School of Commerce, the predecessor of the Erasmus University Rotterdam. And this institution, in its various forms, has been in existence, as many of you know, for 106 years. That too is a cause for celebration. And for a one-hundred-and-six-year-old, you’re in pretty good shape! Many congratulations.
And may I also say, we have the honour and good fortune to have the most recent recipient of the Nobel Prize in Economics here with us today.
Madame Duflo, I have a speech in French prepared, but I learned that you have been living in the United States for at least twenty years. Your English is propably better than mine, so let me just congratulate you and thank you very much for being here. It is a great honour, c’est un honneur de vous rencontrer aujourd’hui à Rotterdam.
Ladies and gentlemen – dames en heren - I always enjoy being here in the dynamic and versatile city of Rotterdam. It’s a city with a very Dutch, very practical mentality. Just roll up your sleeves and get on with it. Actions speak louder than words. Niet lullen, maar poetsen. U kent dat wel. En nee, ik laat de vertaling even zitten.
I was fortunate enough to live in Rotterdam for six months, which I’m sure you’ll agree was far too short. But my father grew up in this city, and so I came here often as a child to visit my grandmother.
When I mention her, I immediately have to think how crucially important education was in her life. Her father, my great grandfather, dropped out of high school when he was young even though he had the intellectual ability to study. And with that, he missed the opportunity to go to university, and that was something he came to regret as he grew older. And even though he might not have been very progressive in every field, one thing was clear to him. Education was the road to a better future. And if his children would have the ability to go to university, he would provide the opportunity. Even though he wasn’t rich. And therefore at the end of the 1920’s, my grandmother went from Nijmegen to Groningen to study Dutch literature. And as you can appreciate, this wasn’t very common at the time. Going to university was something for a very small minority. And among that group were actually only very few women. After university, she became a teacher here in Rotterdam. And the same was true for my grandfather, who first was a teacher of Greek and Latin here in Rotterdam, and later became a university professor in Brussels. Education changed and enriched their lives.
Ladies and gentlemen, I mentioned my fondness of Rotterdam, and it is probably no coincidence that Jan Tinbergen wanted to work in this city and specifically at this institution. After all, he wasn’t a typical academic, poring over dusty books and pondering complicated issues at length. Yes off course, he was a thinker. But he was also clearly a man of action, preferably on matters where he could really make a difference. He combined his academic curiosity with idealism and a strong sense of responsibility. And he believed knowledge should be used to contribute to a better society, to a better world even. And in doing so he saw no reason to think small.
What is the essence of Tinbergen’s legacy? I think it’s a combination of sound analysis, a rational outlook, audacity and a long-term view. It’s hard to overstate his contribution to academic research, and to the way we in the Netherlands, but also beyond, we use economics to shape future policy.
For Jan Tinbergen, education was the key to a better world. Not only was he an outstanding teacher himself, he saw education as the best route out of income inequality. So how do you ensure better education for as many people as possible? Tinbergen considered measures like ‘contributions to the cost of living, the granting of a student’s wage, and a campaign of persuasion and propaganda.’ Because he saw a problem too, namely ‘the lack of willingness among young people to educate themselves.’ He wrote, ‘So in part this also concerns a process of teaching people to look ahead more; they will be grateful for that later on.’
Ladies and gentlemen, let me add something else to Tinbergen’s message.
I believe that the most important lessons you learn as a student, you learn not only in lecture halls, but outside of them, too. Your student years are a time not only for intellectual development, but also for personal development and personal enrichment.
The combination of academic learning, life lessons and standing on your own two feet is invaluable. Personally I had the privilege to study in Leiden, Rome, Fontainebleau and Singapore – and yes, it was a fascinating journey intellectually. But I have learned at least as much from being in a new environment, from my interactions with other students, and just trying to figure out what life is all about.
And this brings me back to Tinbergen – and his continual appeal on students to develop themselves, to develop their talents and to make the best of the future.
Because he saw education as an excellent investment in yourself and in society.
And now today it’s up to the Erasmus University, and all those other outstanding Dutch universities, to develop that talent and that brainpower further. And sow the seeds of a flourishing future.
Ladies and gentlemen, I’m a firm believer in long-term thinking. But like many of my fellow politicians I often get caught in the grip of short-term issues.
As former UK Prime Minister Harold Wilson said, ‘a week is a long time in politics’. And it is very much true. And even if we do look beyond a week, it’s seldom much further than the next general election. I think that our obligation is to force ourselves to truly look at the longer term. No matter how imperfect that attempt may turn out to be. Indeed, none of us knows what the world will look like tomorrow. And although I am relatively optimistic about that future in the medium term, I am far more worried about the longer term in the Netherlands, particularly when I look at the economy and productivity.
Let me tell you why. Already, new technologies like artificial intelligence, algorithms and biotechnology are starting to have a profound effect on the way we work and live. And the impact is likely to get much bigger. Nobody knows how quickly, or exactly what form this will take, but it’s clear to me that that these changes will have a huge impact on many people’s jobs: from professors to radiologists, and from shop assistants to mechanics.
And if you add to that the relatively high public expenditure in the Netherlands, and you add an ageing population, and you add mediocre economic growth, not compared to the other European countries, but compared to the rest of the world, you are looking at a future that’s not necessarily bright, and you are looking at a clear case for change.
But there’s also an opportunity here. It stems from the exceptionally low and sometimes negative interest rates combined with our solid triple A credit rating.
As a minister of Finance I find myself in the bizarre situation that if I borrow money for a period of thirty years, I actually get paid for doing so. Isn’t that amazing. It defies logic, but that’s currently the reality. Those low interest rates work against us in the debate on pensions, and they are not beneficial to people with modest savings in a bank account either. But when it comes to government finances, they certainly provide us with opportunities.
Now, if I combine that case for change with the opportunity provided by low interest rates, it raises the following question: shouldn’t we, under very specific conditions, be investing in our long-term earning capacity?
That is precisely why the government is currently developing an investment fund. An investment fund with the central aim to boost long term economic growth. And therefore a fund, that focuses on some of the core engines of economic growth:
R&D and innovation;
And knowledge development, or human capital if you will.
You may have read about it in the newspaper, or even talked about it during lectures. Currently civil servants from various ministries are working out the details. And frankly, even though I am a big believer in the idea, it is quite scary for me as a Finance minister. We are talking billions of euros, we are talking a number of decades and there simply is no guarantee that the money will indeed go to projects that contribute truly to the productivity of the economy.
But the fact that it is difficult and the fact that to me at least it is scary, shouldn’t be a reason not to do it. It is a reason to set the parameters and the governance right, as Tinbergen would argue.
The last category I just mentioned, knowledge development is the most relevant to you. In my view, investment in human capital is one of the most effective ways to prepare for what is by definition an uncertain future. After all, we don’t know what tomorrow’s economy will look like and what type tools and skills we will need. All we can do is educate ourselves and educate the minds that over the next few decades will invent things we yet can’t even conceive. With rock-solid primary education, secondary education, tertiary education, on the job learning, training and research, we can indeed build a strong and durable foundation for our country’s future.
And by the way, let me be clear on that as well, that implies that every kid that grows up in this city and across the Netherlands, gets the education linked to his or her ability, including university education. Regardless of the income of his or her parents.
Ladies and gentleman, let me move from the government plans to you. I’ll start with the students in this room. You are the ones who are going to be running things: you represent the Netherlands of 2050. Our human capital is sitting right here in front of me. My most important message to you is this: do not underestimate your own impact. No, we’re not all going to become the next Jan Tinbergen, but all of us can make a difference in the world, big or small.
Use your talents, as Tinbergen did. Choose your own path and dare to think big.
If you then crash and burn like I did many times, that’s okay. You get up and you move forward. In the long run you’ll learn from the experience. But don’t let the failures and the fears of people who are thirty years your senior make you believe that you must follow a certain path.
And to the academics in the room, may i ask you to keep the spirit of Jan Tinbergen alive. That entails a number of things. Tinbergen combined reason with idealism. He thought beyond his own discipline. And he was always mindful of the relevance to society of various issues. I gather that your university in particular has put these principles at the heart of its plans for the coming year.
And finally to everyone in this room who is older than 25. I think those are many. A brief anecdote. In the past I’ve been a member of the Dutch senate. And everyone who has been to that building once knows the tremendously beautiful ceiling. And at that ceiling you see all sorts of trading partners of what was at the time, 400 years ago, the Dutch Republic. And these trading partners are looking down at the people in the room and watch whether there interests are taking into account. In the very middle of the ceiling is a group of very small figures and they seem to try to step into the room through a hole. It was long believed by historians that these were the Spanish or the French or the British, threatening the trade or potentially the very existence of the Dutch Republic. A couple of years ago the ceiling was cleaned. Then it became clear that these figures weren’t the Spanish, the French, or the English. These figures were kids. And historians started to see the analogy. These kids are the Flower of the Nation, de Bloem der Natie. And they assess whether the people in that room are taking their interest into account. As we should.
Ladies and gentlemen, I’d like to close now in the spirit of Jan Tinbergen.
The story goes that, when he was director of the Netherlands Bureau for Economic Policy Analysis, he would have a meter ticking away at each meeting, showing how much money was being spent on the highly paid employees around the table. In that same amount of time, they could have been producing useful calculations to make the world a better place. Or, as he himself once wrote, ‘For some queer and deplorable reason most human beings are more impressed by words than by figures, to the great disadvantage of mankind.’
Happy birthday and thank you very much.