In Holland, the future is now | FT Alphaville

In Holland, the future is now

Matt Steinglass, the FT’s Netherlands correspondent, submits this guest post about the projected Dutch budget deficit and how language affects attitudes towards debt.

The Dutch Central Planning Bureau plunged the country’s political scene into a maelstrom on Thursday by releasing figures estimating the country’s budget deficit will reach 4.5 per cent of GDP in 2013.

At the same time, it provided tangential support for the argument of Yale economics professor Kevin Chen, who put out a working paper in January arguing that different countries’ attitudes towards savings and debt are explained partly by the way their languages treat the future tense.

Mr Chen’s paper garnered attention recently from the Washington Post and across the blogosphere.

In languages such as German, Dutch, Finnish and Japanese, speakers can use present-tense verbs to refer to future events (“weak future-time reference”). In Spanish, Greek, French and English, events in the future must take specifically marked future-tense verbs (“strong future-time reference”).

Mr Chen found that countries speaking weak future-time reference languages tend to have higher savings rates and less debt, because they don’t discount the future as strongly as countries speaking languages that force you to treat the future as an entirely different temporal modality.

Which brings us back to the Dutch Central Planning Bureau, whose announcement Thursday begins:

“Het Centraal Planbureau verwacht dat het begrotingstekort (EMU saldo) in 2013 4,5 procent, ofwel 28 miljard euro bedraagt.”

(“The Central Planning Bureau expects that the budget deficit (EMU balance) in 2013 amounts to 4.5 percent, or 28 billion euros.”)

The bureau “expects” that the deficit “amounts to” 4.5 per cent of GDP. Not “will amount to”, but “amounts to”. That deficit won’t arrive for a year and a half, but from the Dutch point of view it’s already here. And the country’s political class has reacted accordingly, launching three weeks of negotiations over budget cuts that could lead to the fall of the coalition government.

The contrast with the US’s treatment of national debt negotiations, which last year came within days of plunging the country into default, is striking. And as Mr Chen’s figures show, countries that speak weak future-reference languages have higher savings and lower debt than those that speak strong future-reference languages.