SABANGBAR TELEGRAPH

There has been a lot of talk about the dealings of private equity firms and hedge funds in The Netherlands as of late. Their presence has stirred somewhat of an upheaval and the country's establishment is struggling to grasp the intricate details of their business activities, which can indeed be somewhat of a challenge for the less initiated. Born and raised in the Anglo-Saxon world these financial entities decided only a few years ago to set sail and shift their attention to European shores, bringing with them all sorts of alien phenomena such as hostile takeovers, leveraged buyouts and shareholder activism, raising havoc and disturbing the peace and quiet in the once so rustic economic landscape of the Netherlands.

Vexed by these alien developments yet unabated in their natural propensity to organize the unordered and out of bounds the 'Tweede Kamer' (the Dutch Commons) recently summoned its experts and trustworthy to hold a special meeting and establish what it is exactly these fast-laned foreigners do for a living. The Socialist Party (SP) of course already knew what to make of them, and it was with their customary keenness to disclose the evil dealings of all those sensible enough not to believe in Socialist Utopia that they scheduled this meeting to let the world know what plight these financial rogues were causing in the cumfy-cosy realm that is, or rather was, the Dutch economy. The rest of the apparatchiks privy to the meeting remained somewhat dumbfounded by the vernacular of modern finance and the press, somewhat better informed about the ways of the Anglo-Saxon, assured the public that further research was needed but, once our soothsayers' prophecies were available, we could rest assured that any invasion of deviation would be co-ordinized as always by the bureaucracy's brightest.

But seriously, what exactly do we in Holland know about the dealings of private equity and hedge funds? Do we know how they work? What their aims are beyond "stealing assets from proud Dutch multinationals"? Do we actually bother to understand what long-run impacts these companies could have on the Dutch economy? Do we in The Netherlands actually know anything near enough about them to be able to conclude anything at all at this moment?

No we don't.

To my amazement I found the 'Financieel Dagblad', the only Dutch newspaper making a structural effort to produce some prudent economic journalism, taking the easy way out in covering Private Equity by shamelessly reprinting translated articles from Bloomberg, and especially those worrysome articles dealing with the low 'spreads' (interest rates) on junkbonds (which are often used to finance corporate takeovers). Turning over the page I was equally amazed, but not so much surprised, when reading a full-page commentary on how well the Rheinland stakeholder consensus model served us in the past, and how the Anglo-Saxon model and its sole focus on creating shareholder value would destroy Dutch corporate legacy and the general strength of the Dutch economy. There are examples abound of similar press. Indeed every instance where the likes of KKR, Blackstone or some shareholder activist hedge fund sees it fit to intervene in another endemically underperforming Dutch corporate legacy the press and politicians alike scream blue murder and vowe to put an end to corporate raider activities.

In a way this is all very much understandable. The Netherlands has a very strong consensus model on, oh well, virtually anything public. It therefore is no surprise that this model extends itself to public companies as well. Strong reactions on 'give me the money!'-shareholder activity and hastily organized corporate takeovers is pretty much what is to be expected out here. In The Netherlands, concessions have to made, bargains have to be struck and after a long gruelling process of deliberations between employers, employees and government officials, everyone has to walk out pretty much satisfied. Or else the deal stinks. But in this case, and despite the distinct olfactory perception of economic establishment in The Netherlands, there might be some pleasant odor to these new kids on the block after all. Only if anyone would bother to go out and smell the roses and actually inform themselves about what it is they're so worked up about.

As to these roses: The Dutch corporate legacy has indeed been underperforming for quite some time now. This is costing The Netherlands jobs and investments. Worse yet, there has been a disturbing lack of new listings on the Dutch exchange (the AEX), which is emblematic of the equally disturbing lack of entrepreneurial spririt in The Netherlands as a whole; start-ups tend to be scarce and mostly limited to hopeful immigrants. So, in this sense, there isn't anything wrong with Anglo-Saxons shaking things up a bit. There isn't anything wrong with them showing us that it is easy to make a pile of money when you're willing to take risks. It is the latter mentality that has been missing in this country ever since the Golden Age stumbled to its end. As excellenty described by Liah Greenfeld in 'The Spirit of Capitalism' it is since the close of that 17th century wonder of Dutch economic bravery that we have grown so excessively risk averse. Dutch entrepreneurialism is without any doubt a thing of the past, one would even say a myth, and if it would be through foreign financial 'vultures' that we learn to rekindle that long lost economic frontier metality, than so be it.

And besides all that, there also isn't really anything dodgy about either corporate buy-outs or shareholder activism. There isn't anything wrong with cutting a bloated administrative staff or selling off a part of a company because it just doesn't make any money. Moreover, there isn't anything wrong with piling debt onto the balance sheet of a newly bought company when it would force any odd Ross Johnson into a healthy state of financial prudency. (This is not say I do not object to corporate raider activities such as performed by Carl Icahn during the 1980s. Still, there is fat chance of these activities happening due to the low inflation figures of late.) And of course it is true that these 'locusts' thrive on cutting costs and sacking people. But then again, think of it this way: Would they thrive when cutting all costs and sacking everbody? Of course not and that's the whole point: Any business intent on growing, investing and making money has to keep a close eye on the balance sheet. The fact that Dutch companies have shown such dismal growth figures shows that they have not been taking a tight enough reign over costs. They have let their eyes wander off the balance sheet. And thus by not paying attention to the bottom line they are not only impeding the future growth capacity of the company that hired them, but that of the whole Dutch economy as well.

And to those still agitated by such atavistic and reactionary feelings over foreigners taking over our Dutch corporate legacy: Get yourselves out there and build a new legacy and create new jobs in the process. That is, after all, what entrepreneurialism is all about: Starting new business adventures when chances are to be had out there. And, according to the Dutch myth of entrepreneurialism, that is exactly what the Dutch are all about? Right?