Why a National Investment Bank is a very bad idea

Calls are growing for a National Investment Bank. With it, 100 billion euros could be invested in the Dutch economy. But the Netherlands is already overflowing with banks; what is missing are real investments. Plus: eight alternatives that are more effective.

Forget the polarization everyone talks about. The Dutch polder is alive and well; everyone is delightfully in agreement. From PVV to professors, from labor union to billionaires. The Netherlands should have a National Investment Bank. Or, to be more precise, a "national investment and innovation bank" (because that sounds nicer). If that consensus manages to settle into the election manifestos of enough political parties in the coming months, it's almost a done deal. Do we want an Investment Bank? Then get an Investment Bank!

This astonishingly ill-founded plan has made itself wildly popular in a matter of months. But what does the plan actually entail? And is it wise to set our sights on it?

Where did this idea come from?

The ball started rolling when FME, the trade association of the technology industry, presented an eleven-point plan in early February to pull the industry out of the doldrums. With prominent companies like ASML, Tata Steel, Philips and DAF, the club has a lot of goodwill in the Netherlands.

For its recommendations, FME relied in part on a well-received report written last year by Mario Draghi, the former president of the European Central Bank. According to Draghi, Europe needed to invest 800 billion euros in the economy, which, according to FME, would amount to about 10 billion euros for the Netherlands.

The straight-talking FME chairman Henrar (ex-Tata) threw a spanner in the works. In an interview with NRC following the FME plan, he argued for a national investment bank, just like Germany (KFW) and France (Bpifrance) have. That way you can get a flywheel effect.

After all, a bank can not only lend its own money, but also attract money from others, such as savers and bond investors. Some old-timers from the polder developed this idea into a plan of six A4 sheets. And they collected 51 signatures for it.

Because, as the National Investment Bank website summarizes it "in a nutshell," "1 becomes 10. You as a government put 1 billion in the bank as a buffer, and with that you can raise 9 billion in loans from, say, pension funds. So you have 10 billion. And if as a government you put'say 10-12 billion' into it, as they want, so you can make it 100 billion.

Not only that, but this amount seems to fall from heaven. We don't have to raise taxes for it, we don't have to cut spending, it doesn't run up the national debt. Who wouldn't want this?

The Lower House was quickly persuaded. CDA leader Henri Bontenbal and Volt frontman Laurens Dassen submitted a motion in May to see how the already existing Invest-NL could be converted into such a National Investment Bank. And of course they got many colleagues on board: 143 MPs out of 150 voted in favor. Only a few parties immune to social consensus, such as Forum and the Party for the Animals, voted against.

We don't have too few, but too many banks

In the coming period, political parties are going to tinker with their election program and its financial underpinnings. No doubt this 'free money' from Henrar and co will play a prominent role. Because there are not that many windfalls now that the economy is suffering from a trade war and billions more 'have to' go to defense.

But in doing so, the Netherlands is treading an unholy path.