Harry Geels: Are the Netherlands too strict? Or is ASML too spoiled?
This column was originally written in Dutch. This is an English translation.
By Harry Geels
ASML CEO Christophe Fouquet recently threatened to leave the Netherlands again in The Economist, in part because of the 'disastrous climate policy'. A lot is indeed going wrong in 'climate planning'. But he also forgets a number of inconvenient truths.
The ASML boss warns Europe, read the headline in The Economist. Exactly one year ago he also threatened to leave the Netherlands, after which the Dutch government and the municipality of Eindhoven decided to invest some 2.5 billion euros in the region around ASML, as well as in infrastructure, housing and education. I called that investment plan at the time ad hoc, a reward for threats and support for the 'corporatocracy', a system in which powerful companies, working together with the government, appropriate all kinds of benefits for themselves.
'Disastrous climate policy'
In the interview with The Economist, Fouquet mainly criticizes the skyrocketing energy prices, what he sees as strict climate policy and a lack of vision among policymakers. He feels that Europe does not support its semiconductor industry sufficiently. Fouquet also criticizes the Netherlands for blindly following American export restrictions, which undermines technological cooperation and the financial position of the company. He calls on governments to reduce regulation and pursue a realistic energy policy.
Figure 1: Cost of gas, NL versus US
It is not the first time that the business community has grumbled about climate policy. Various industrial companies have already left the Netherlands (and Germany). Recently, the chemical industry, which is slowly disappearing from the Netherlands, was in the news again. When it comes to the climate, the Netherlands is indeed one of the best behaved children in the class. And due to poor planning, our electricity grid is overloaded. The climate transition is a good example of how difficult or impossible the ideal of social engineering is.
Three unmentioned facts
Despite the justified points of criticism, ASML's threats do not deserve any praise. Threatening is actually a fallacy, namely that of Argumentum ad Baculum (an appeal to power). It can also be interpreted as self-undermining rhetoric or emotional manipulation. Given the roots of the company and the knowledge base that partly originates from Philips and Natlab (which had an important collaboration with Dutch education), this attitude is not appropriate.
There are three other facts not mentioned behind Fouquet's words. First, the €2.5 billion investment plan negotiated last year. It would be bizarre to leave the Netherlands after all the favors received. Secondly, ASML has a de facto monopoly. It is the only company in the world that can produce EUV lithography machines. Monopolies enjoy major advantages in any case, in terms of their power to set prices for customers and their purchasing power for suppliers, making ASML a profit machine. So stop whining!
Thirdly, the company has already enjoyed many tax benefits. According to calculations by SOMO, ASML has benefited from tax breaks to the tune of billions, including via the Innovation Box and for years via the Belgium route (which meant it paid less corporation tax). ASML benefits like no other Dutch company from the 30% ruling, tax benefits on 'necessary' international employees. ASML may also have been able to make use of the bulk consumer discount on energy costs.
Finally, two more comments
It is good that ASML points out Europe's lack of competitiveness, an abundance of bureaucracy and rules, and high energy prices. But threatening can be counterproductive. Furthermore, it is good to realize that ASML's threats stem from the aforementioned corporatocracy ('socialism for the rich'), and not – as many other commentators claim – from a possible flaw in capitalism. Capitalism no longer exists, and that is the real problem we are dealing with.
This article contains the personal opinion of Harry Geels