'Going Dutch' by Russell Shorto

Interesting article ‘Going Dutch’ by author Russell Shorto on his stay in the Netherlands, comparing some aspects of Dutch culture and economics to what he’s used to in the U.S.  He was initially disturbed by a certain number…

For the first few months I was haunted by a number: 52. It reverberated in my head; I felt myself a prisoner trying to escape its bars. For it represents the rate at which the income I earn, as a writer and as the director of an institute, is to be taxed. To be plain: more than half of my modest haul, I learned on arrival, was to be swallowed by the Dutch welfare state.

But as he stays longer and gets a better sense of how things compare, it starts to sting a little less…

While the top income-tax rate in the United States is 35 percent, the numbers are a bit misleading. “People coming from the U.S. to the Netherlands focus on that difference, and on that 52 percent,” said Constanze Woelfle, an American accountant based in the Netherlands whose clients are mostly American expats. “But consider that the Dutch rate includes social security, which in the U.S. is an additional 6.2 percent. Then in the U.S. you have state and local taxes, and much higher real estate taxes. If you were to add all those up, you would get close to the 52 percent.”

And he finds some clear advantages to the Dutch system.

In the United States, for a family of four, I paid about $1,400 a month for a policy that didn’t include dental care and was so filled with co-pays, deductibles and exceptions that I routinely found myself replaying in my mind the Monty Python skit in which the man complains about his insurance claim and the agent says, “In your policy it states quite clearly that no claim you make will be paid.” A similar Dutch policy, by contrast, cost 300 euros a month (about $390), with no co-pays, and included dental coverage; about 90 percent of the cost of my daughter’s braces was covered.

Shorto covers much more ground than simply taxes and health insurance… well worth a read to get a sense of some of the unique aspects of the Dutch system – it’s not a simple matter of direct government control.  And some things really are just culturally different; examining other cultures can help you see what’s special about your own.

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  • Jim  On May 5, 2009 at 8:48 am

    I am intrigued by this sentence:

    “A similar Dutch policy, by contrast, cost 300 euros a month (about $390), with no co-pays, and included dental coverage; about 90 percent of the cost of my daughter’s braces was covered.”

    “Similar” implies to me that the policies were comparable in care, methods of receiving care, etc., etc., etc.

    Putting on my “economic hat” this tells me that Dutch medical care costs 27% of the cost in the United States (which he states was $1440 per month, excluding dental insurance) – “policy” costs are based on cost of care. Agreed?

    Does he explain how this could be? Do Doctors get 1/4 the pay? Is the cost of running a hospital 1/4 of the cost in the U.S.? Or are they truly not “similar”. You have lived there, do you understand how this could be with “similar policies”?

    I will not have time to read the article so would appreciate your comments!

  • Curt  On May 5, 2009 at 9:30 am

    A fair question, and one that I can’t shed too much light on. I suspect that there are in fact many differences, though which differences would be seen as ‘significant’ is hard to say. From the article, here’s an overall picture of their system:

    The Dutch health care system was drastically revamped in 2006, and its new incarnation has come in for a lot of international scrutiny. “The previous system was actually introduced in 1944 by the Germans, while they were paying our country a visit,” said Hans Hoogervorst, the former minister of public health who developed and implemented the new system three years ago. The old system involved a vast patchwork of insurers and depended on heavy government regulation to keep costs down. Hoogervorst — a conservative economist and devout believer in the powers of the free market — wanted to streamline and privatize the system, to offer consumers their choice of insurers and plans but also to ensure that certain conditions were maintained via regulation and oversight. It is illegal in the current system for an insurance company to refuse to accept a client, or to charge more for a client based on age or health. Where in the United States insurance companies try to wriggle out of covering chronically ill patients, in the Dutch system the government oversees a fund from which insurers that take on more high-cost clients can be compensated. It seems to work. A study by the Commonwealth Fund found that 54 percent of chronically ill patients in the United States avoided some form of medical attention in 2008 because of costs, while only 7 percent of chronically ill people in the Netherlands did so for financial reasons.

    I do suspect that doctors are paid less there. And I suspect they are less technology-based in terms of general care. There must be some cost savings based on lowered administrative costs. And then there are some features that may be seen as ‘old-fashioned’, such as these two items from the article:

    Julie is a friend of mine, part of my American expat cabal in Amsterdam. She’s a fellow writer, and the second of her two children, Jooske, was born at home. Julie told me she isn’t a “hard-core granola type,” but giving birth at home, with the help of a midwife, is a longstanding Dutch tradition, so, she said, “I was very when-in-Rome about it.” She is now a fan of home birth.

    I’ve found that many differences between the American and Dutch systems are more cultural than anything else. The Dutch system has a more old-fashioned, personal feel. Nearly all G.P.’s in the country make house calls to infirm or elderly patients. My G.P., like many others, devotes one hour per day to walk-in visits.

    One thing I will say is that the Dutch look pretty healthy, and they are definitely very tall!

  • Jim  On May 5, 2009 at 11:59 am

    His comments sound like it is “magic” that allows the policy cost to be at a level of 27% – and actually significantly less than that since he now gets dental insurance – so I thought I would check Wikipedia and and here is their article. The answer appears to be that that he pays only 45% of the cost; 50% is payed by the Employer (Did he mention that?) and 5% by the Government. Overall the Government pays 62% of costs since they also reimburse the insurers for high risk coverage. Read more here:


    I think Mr. Shorto is being a little unfair with his explanation. It appears the cost of medical treatment in the Netherlands may not be any different at all. It is just paid for through taxes – meaning that perhaps if they had insurance like the U.S. he might be ahead with the reduced taxes. Don’t know, but he needs to be clearer in why the policy costs are lower.

    Another comment on his article is his friend refers to the maximum taxation level of 35% federal income tax in the U.S. I am certainly not at that rate and I doubt either you or he is. So the whole comparison his friend makes is not really accurate. I make a fairly large income and pay federal and state income tax similar to 30%. 52% is a BIG federal income tax (I am assuming this is what the 52% he refers to is) and with sales tax?, value added tax? or whatever else they have you are being taxed much greater than in the U.S. I suspect.

    If you support single payer, then this would be acceptable. But be ready for increased taxes! He should say that. I would also like to know the efficiency level of the system: waiting times, allocation of services. What did you hear when you were there?

  • Curt  On May 6, 2009 at 8:57 am

    I think it goes to show how hard it is to do a ‘true comparison’ – there are so many factors. The 52% rate in the Netherlands is also a top marginal rate, but I think the income boundary for hitting that rate is much lower than the boundary in the U.S. And there is a VAT in the Netherlands that is built into the prices (6% for food and essentials, 19% for other things).

    I think to start to get a sense of how things really compare, you’d have to do comparative calculations for people at different income levels and family configurations and see how things work out.

  • Jim  On May 6, 2009 at 10:12 am

    I agree with your comment. Will now make it a point to read his article and judge if he purposely misrepresented this item or if he gave a fair opinion. Since you know what I think of the NYT, you probably assume I will go in with a bias. Could be – but I will try my best not to.

    Lesson is you have to be very careful what you read and what you believe!

  • Curt  On May 6, 2009 at 11:46 am

    Of course you can make your own judgment, but here’s what I’d say about his intent:
    – he’s trying to describe his experience of working/living in the Netherlands, not trying to do a detailed comparison of the two systems
    – he’s upfront that his first reaction was that the taxes over there are awfully high!
    – but as he spent more time there he found there are many offsetting factors and cultural differences, and he came to a better appreciation of how their system works.

  • Jim  On May 6, 2009 at 12:17 pm

    Read it and obviously he is a believer in “socialism” – of the Dutch variety. Some observations:

    He keeps mentioning the “Government” paying him for children, vacation, etc (although he doesn’t mention it directly in his Health Policy analysis) – does he realize there is no “Government” resources – only his neighbors! He thinks it is good his neighbors pay for his kids, vacation and healthcare; I’d rather see these things drive people to acquire the assets to care for themselves. We rehash the same thing over and over!!

    His dig at Fox News fits his attitude. Of course, I guess my digs at the NYT are not too different, though I don’t think I would do it in a nationally published article. Who knows?

    He is obviously in a “socialist” country, though he and it seems the Dutch don’t want to admit it. He pitches the private sector involvement, but to take healthcare as an example, this is just a saleable way to handle it; you can call it whatever you want, but with the Government dictatiting rates for all, it is a “single payer” system – they just dice up the money they use!

    I understand where the Dutch are coming from since they come from more of a “collectavist” background but doubt much of their system would work here since they have only 5% of the population and GDP. Caring for 16 million people is a little different than 300 million people. And he seems to recognize that all of their systems would not work.

    “There is no doubt the U.S. has the best medical care in the world – for those who can pay the top prices..” says Hans Hoogervorst. If it is the best in the world, it has gotten there through a completely different system than the Dutch have. Why would we want to change this? Why wouldn’t we want people to be driven by this fact so they can work to get that best in the world, and if they can’t make it let the private sector or churches as he admits used to be the case in the Netherlands take care of those – who will still get care in the best system, unlike the Dutch.

    I take exception to his cost analysis as he does not mention the employer burden – which obviously causes inflation – a hidden tax or the Government contribution from his neighbors. I think his description is misleading. CLARITY!

    “What happens to my family if I have a heart attack? What happens when I turn 65 or 70? America is the land of the free. But I think we are freer.” says Geert Mak.

    This is a non sequiter! First two sentences have nothing to do with the last two. America is the land of the free – much more so than the Netherlands. Dutch are not freer, only more free of worry – which I considerr the driver of progress!

    Good discussion!

  • Jim  On May 7, 2009 at 7:57 am

    Woke up to a thought this morning on language and the difficulty of communicating ideas:

    Was up late last week and watched “Shawshank Redemption” – a great movie! Morgan Freeman, after 40+ years in Shawshank, was deathly afraid to leave. Why? Because he was “free” in the sense that Mr. Geert Mak uses the word free. He had no worries in his life and was afraid he could not remember how to survive in the real world.

    This is not how Americans define “free.” The ability to do what you like when you want is “free”. This definition makes a lot more sense to the right and I am interested in why the left is willing to give this up. Life is full of worry; depending on the Government (your neighbors) to alleviate this worry is the opposite of “freedom”.

    Now take my analogy with a grain of salt – but don’t disregard it! The Dutch are not Shawshank, but when they think they are “free”, it is because they do not remember what “free” truly is, so it has taken on a new meaning. WORDS ARE THE MIRROR OF THE SOUL.

    As one of the very rich early capitalists said – I paraphrase because I do not remember which it was (Carnagie?):

    “If I do not go to bed worried each night, I know I am being unsuccessful.”
    Does that make sense?

  • Curt  On May 7, 2009 at 9:38 am

    I agree that ‘freedom’ is a very interesting topic. And there seem to be at least a couple senses of it: ‘freedom to’ do things and ‘freedom from’ worries and concerns. If one is worried about everything, there may be so much stress that you can barely function – i.e. if one’s health is failing, or you’re homeless, you’ll have little freedom to do other things until you take care of the big problems. But if one has no worries, then it seems like there’s no risk-taking, no ambition, no reason for achievement.

    At a far extreme of freedom is the “true individualist” who accepts no boundaries and ‘does whatever he wants’ (or as one song goes, has ‘nothing left to lose’!). At the other extreme is someone who has little choice left, a slave perhaps or a prisoner.

    Most people are somewhere in the middle; I agree that the American ideal tends to emphasize the ‘freedom to’ do things, and other societies lean more toward trying to provide more ‘freedom from’ basic concerns. The trick seems to be to find a balance that works for a society… although in many ways I think it’s possible to achieve gains in both directions simultaneously. I don’t think it’s a zero-sum game – for example, if you have freedom from hunger, you have freedom to pursue your dreams. Civil rights laws enforced by government provides a lot extension of freedom.

    And this extends to all sorts of things. If you value the notion that people should be free to try new business ventures, for example, then you probably also need to make bankruptcy laws not too punitive, so that people can try, fail, and get back up.

  • Jim  On May 7, 2009 at 11:29 am

    “Freedom” given to you is not Freedom at all. It is “enslavement” at some level. I do not accept that any level of “enslavement” is good for an individual or society.

    What giving “Freedom” does is move society towards it’s lowest common denominator.

    Wrong way to move!

  • Curt  On May 7, 2009 at 1:14 pm

    I think you’re getting overly dogmatic.

    Who among us has not been given all kinds of freedoms? I benefit from all sorts of efforts that came before me, whether it’s freedom from monarchy as won in the Revolutionary War, freedom from various types of ignorance thru efforts of scientists and scholars, freedom to pursue various activities as enabled by my parents and others. I think we take all sorts of freedoms for granted as given – we are lucky to not have to fight for every freedom we enjoy.

  • Jim  On May 8, 2009 at 9:32 am

    Not dogmatic at all!

    Every freedom you mention was “earned” by the efforts of your ancestors/society. Let’s call them “earned freedoms” and let’s hope we always benefit from them.

    I was talking about Government giving us “unearned freedoms” such as “freedom” from worry, or freedom to have 4 weeks vacation each year. These are not “earned”! They are political pandering – in the Netherlands as well as here.

    Again – it is our understanding of the word “freedom” – we have different definitions and this keeps us from agreeing!

  • Curt  On May 8, 2009 at 10:49 am

    Agreed that it is often tough to ensure we are talking about the same thing… which is why I think it can be helpful to get to specific cases.

    The ‘earned freedoms’ – yes, we hope to always benefit from them, and occasionally we are called upon to defend them.

    So just to help with clarifying – how would you classify things like
    – child labor laws
    – workplace safety rules
    – overtime rules

    It seems to me that our sense of ‘freedom’ is subject to change over time, and is subject to many communal norms. I hear what you’re saying about ‘unearned freedoms’ – but I have a feeling that some things feel initially ‘unearned’ but over time become accepted. You may see this as a progressive ‘enslavement’ – and I do acknowledge some danger going in that direction – but I think some of it is ‘advancing civilization’.

  • Jim  On May 8, 2009 at 11:21 am

    Good questions and comments. Some “unearned freedoms” may be “advancing civilization”. Can’t think of any off the top.

    Not sure your three sets of laws/rules above should be considered “freedoms”. Seems to me they are in another category in which laws stop abuse. Is my feeling comfortable to walk the street without being murdered a “freedom” the Government guarantees? I guess you could say it is, but it seems to me it is in another category from what we are talking about – guaranteed medical care and vacations!

    Are the three sets of laws/rules you reference above controlled at the Federal level? I have to admit I do not know! If they are, I disagree with them being at the Federal level. They should be decided at the State level, particularly in todays world with instantaneous communication and the ability to be mobile.

    Of course these laws/rules are necessary and are “advancing civilization” to some degree. Just not sure they belong in the conversation we are having.

    Your comment on the definition of “freedom” changing over time sounds like the defense I am sure you would launch to defend BHO’s first SCOTUS appointment!! In my mind the definition of “freedom” does not change and the definitions in the Constitution do not change! How’s that for a comment. I’m sure we will be talking about his appointment. Read Thomas Sowell on my blog and tell me what you think.

    Do either of us ever work?

  • Curt  On May 9, 2009 at 6:20 pm

    I’m going to take this conversation over to your blog… many interesting threads to discuss.

  • oakhill193  On May 9, 2009 at 8:11 pm

    I used to think the Europeans were quite lazy, taking extensive vacations over the summer. The continent pretty much shuts down then. Now, I’m jealous. How cool would it be for the Gov’t to drop a few thousand dollars in my bank account each year just so I could take a vacation. Come to think of it, I’ve never met an angry Dutch person.

  • Jim  On May 11, 2009 at 7:23 am


    Not lazy, just in need of some motivation to move up lifes’ “ladder” while remaining “happy”.

    16 million people with no one angry is not good for them or the country!

    The real question is could the same be done with 300+ million in the U.S. or with 1.2 billion in China? That would be a real task!

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