ABSTRACT
The first duty of academic economists is to spell out the consequences of different policies, so as to raise the level of economic literacy. This chapter discusses two quite different ways in which economists can try to fulfill this duty with respect to the problem of unemployment in the Netherlands. It sets out with a brief review of some important trends in the Dutch economy. The chapter considers some examples of the currently dominant way of conducting economic policy. The hypothesis that economic agents form their expectations rationally can explain the puzzling paradox of Dutch economic policy: a weakening of our industrial strength when compared to West-Germany, although cost competetiveness is improving. Trade unions perform important functions, for example in insuring their members against individual acts of injustice on the part of employers, and because they can lower information costs in the labour market.
