"Communist Lowlands"

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"Communist Lowlands"
Stagnating economy: 2005 - 2015
The Lowlands increasingly suffer from international competition from low-cost countries, and become internally i.e. European mainly focussed The export stagnates, and the government applies a restrictive trade policy on imports from specific non EU-countries. European economical cooperation, predominantly with the original EU members, becomes dominant., as the Lowlands are historically an appreciated EU member. Whereas intra-EU trade remains stable, limited growth is realized outside the EU. The Asian economies continue to boom, and benefit greatly from Eastern European and Russian growth. As a result of the protective measures, lack of technical students and limited influx of a highly skilled techno workforce, technology innovations stall. Big multinational companies such as Philips consider moving out of the Lowlands. Productivity growth consequently declines from 1.9% pa to 1.2% pa. Intrinsic GDP growth is limited to c. 0.7% pa.

Migration is only allowed from the Central and Eastern European countries and from family reunions and marriages within the existing immigrant base (mainly Morocco & Turkey). .Partially because of the restrictive migration policy, the overall population remains constant. The labour supply however starts to decline by 0.4% p.a. due to the ageing of the population. The existing social welfare system remains in tact because of strong labour market opposition. The government faces increased expenditure on pensions and publicly provided health care. Public spending as a % of GDP increases from 42% to 46%. To enable this spending, wage taxes are increased for both higher and lower incomes, which in turn further negatively impact the employment situation. The fear for inflation increases, which raises the risk premium on interest rates and it hampers investments. The overall social atmosphere becomes tense: higher income people consider migration, while lower class people perceive a deterioration of standard of living (despite the actual minor GDP growth per capital). New international conflicts against Muslim countries, specifically the invasion of Iran by USA in 2010, result in a further increase of social tension. The first, second and new generation immigrants continue to settle mainly in segregated areas within the Big4 cities, increasing the immigrant ratio in these cities from 43% (2004) to almost 50% in 2015. Unemployment remains high at 8.5 % and reaches levels of 50 % amongst younger immigrants. Riots between immigrants and police occur more frequently in Big4 cities. Crime rates increase. The gap between rich and poor consequently increases.

Major terrorist attack: 2015
Rotterdam harbour is hit by a massive terrorist attack in 2015 resulting in great social unrest, devastation and tremendous economical consequences. After some months of paralysis, emotional debates and riots in the Big4 cities, the government - short of funds - approves an accelerated exploitation of it gas fields to re-establish the infrastructure. Total costs are in excess of €10bn. As a consequence the depletion of the gas fields approaches rapidly: new research confirms that the majority of the fields, responsible for c. 3% of GDP, will be totally depleted by 2020 unless new gas sources are explored and exploited. This results in further unrest in society since some people fear the exploration of ecosensitive areas while others fear negative longer term economic developments.

In and out of the valley of despair: 2015 - 2025
On the back of a general feeling of despair and fear for loss of wealth, newly elected politicians rise to the occasion and manage to change the existing welfare system and labour legislation. The pension age increases to 70 years, and participation of older people, women and immigrants increases mainly in service and healthcare related employment. The government shifts its focus from social welfare towards education. It fosters collaboration between private and public universities, and promotes the value of diversity and inclusion. Training in language skills and basic health care services are offered to low skilled people. Consequently, labour supply increases with 0.4 % - combined with a small productivity increase, this suffices to partly negate the negative impact from declining gas revenues in 2020.

The responsibility of the emerging income in-equality is shifted from 2015 onwards by the government to the private domain: voluntary communities emerge, firstly in the form of extended families (eg. children live under one roof with their parents and grandparents). The Millenium generation, a new group of youngsters in the age of 25 to 45 with a focus on the wider well being of society, are alerted by the increasing gap between rich and poor and start actively participating in these communities and thus manage to institutionalize voluntary communities. Their communication by means of easily accessible web logs slowly start to result in improved feelings of (digital) connectivity. National awareness around the social difficulties spreads rapidly, and leads to a wider feeling of involvement, inclusion and positivism. The traditional media channels complement and trigger a genuine and constructive national and social consciousness based on trust and respect. A new Muslim political party promotes and participates in the voluntary communities, which reduces ethnic distances. New legislation promotes immigrants to settle and concentrate outside the Big4 cities into local communities. Crime levels reduce owing to stronger social control, and terrorist breeding space is limited thru the inclusiveness.

With the institutionalization of the voluntary communities, GDP starts to recover moderately again at around 2025 thanks to improved productivity behind entrepreneurial local communities. Combined with a national feeling of social cohesion, there is a feeling of great hope for further growth.