An Economic History of Luxembourg

This weekend, I decided to check off my list one of those tiny little countries that one rarely has a reason to pass through. While I’m only a four hour journey from Luxembourg, I figured that this might be my last reasonable chance. It’s also convenient because the Ardennes forest is the nearest place for me to find something that resembles a mountain and low population density.

I took off Friday for a three-day weekend, took a bus from Brussels to Luxembourg City, and then had a bit of an adventure with the public bus system to get out to a little town called Mullerthal, where I met up with one leg of a hiking route around the northeast of the little country. I spent a sleepless night in the dense forest and spent the next morning exploring the capital where I had started. The trip had some real highlights that I’ll get to eventually, but they’ll need some context.

For now, I’m going to continue my history kick and share a bit about this tiny country that most of you probably couldn’t place on a map (indeed, many world maps don’t even have enough resolution for it).

That’s actually a good place to start. Where is Luxembourg?

Well, I live in Belgium, and you know that it’s close to me, so it probably borders Belgium.

Indeed, it does, but can you even put Belgium on this map?


Did you find it? Still struggling? It’s a small country. I’ll zoom in a bit.


Ok, now you can see it. And even tiny Luxembourg made the cut!

If you’re still struggling, here’s the answer.


At about 1,000 square miles, Luxembourg is a cutout at the junction of France, Belgium, and Germany.

But don’t let its size fool you. Both the World Bank and IMF have estimated Luxembourg to be the wealthiest country in the world (per capita; the UN disagrees, and I think I know why), and I can attest that it looks like it. Luxembourg city is so well maintained and so full of fancy cars, it’s actually a bit weird. This was the second six-figure car I saw in the first 20 minutes of walking through the city. Most of the others are new luxury cars.


How did tiny little Luxembourg get so rich?

It’s actually not as complicated of a story as one might think, and it actually has a lot to do with its tiny geography.

Luxembourg has actually been around for about a thousand years. ‘Lucilinburhuc’ (literally translating to ‘small castle’) was a castle which became the centrepiece of what would become the County of Luxembourg over the 11th-13th centuries. The aristocracy of Luxembourg led successful armies and expanded their reach during this time. They were so successful that the house of Luxembourg even led the Holy Roman Empire during the 14th and 15th centuries. In the mid-15th century, neglect by the nobles who had gotten too comfy in their foreign roles allowed the Burgundians to conquer Luxembourg. Over the next four centuries, the area would change hands several times between the French, the Spanish, the Dutch, the Austrians, and the Prussians.

In 1815, with the defeat of Napoleon and liberation of his conquered lands, Luxembourg became a Grand Duchy, but it was divided. The Netherlands (more specifically King William I) was awarded the western provinces of Luxembourg. The eastern provinces became part of the new German Confederation. Most of the area makes up modern-day Luxembourg. Some of the eastern areas are now in Germany, and some came under Dutch control in the twentieth century.

The western provinces were treated just like any other Dutch province, but if you read my last post about the history of the Netherlands, you’ll know that this was a very brief period of unification. The Belgian revolution began in 1830 and ended with the Treaty of London in 1839. I’m skipping over all of this because the important part for our purposes is that the treaty gave Belgium the western half of Luxembourg, which is now (somewhat confusingly) also called Luxembourg (dark blue in the southeast here).


Actually, when I told my colleague that I would be spending the weekend in Luxembourg, he asked, “The province or the country?”

And that’s how Luxembourg gets its current form.


Even though the borders would be set for a long time to come, Luxembourg was in no condition to be a sovereign state. It remained part of the German Confederation until its dissolution with the Austro-Prussian War in 1867. Emperor Napoleon III tried to buy Luxembourg from King William III of the Netherlands. The Prussians still controlled the fortress (in what is now Luxembourg City), and they were not about to let the French just walk in. The most dissatisfying compromise for everyone was that no one would get the province, and it would remain neutral and disarmed. Though still technically the personal playground of the King of the Netherlands, Luxembourg was basically on their own at this point. With the death of William III in 1890, Luxembourg passed to the hands of Adolf of Nassau-Weilburg, the progenitor of the dynasty that still reigns today.

But despite all these pretty pictures, it doesn’t seem like any of this would make Luxembourg rich!

No, it didn’t. Luxembourg was pretty poor at this time. It wasn’t until the turn of the twentieth century, that Luxembourg started to put its mineral deposits to use. During the decades leading up to the First World War, immigrants flooded into Luxembourg to work in the mines and steel mills replacing the thousands of emigrants who flooded out of the industrializing capital in the nineteenth century. The increase in labourers led to legislative actions that would lay the groundwork for progressive worker protections in the twentieth century.

The First World War put a real damper on the economy after Germany violated the country’s neutrality, and devastating fighting ruined much of the countryside when they were pushed back. After the war, Luxembourg broke ties with Germany and realigned with Belgium. The “Roaring Twenties” is often characterized in the US by massive steelworks and the first skyscrapers; much of this steel came from Luxembourg. With increasing wealth came pressure for labour reform, and Luxembourg led the world in workers’ rights legislation such as a sliding pay scale that was pegged to the cost of living.

The economic crisis of the 30s hit Luxembourg as well, and another German occupation in the 40s meant that little progress was made until the end of the war in 1945.

It turns out that rebuilding a continent ravaged by four years of the most destructive warfare in history is pretty good for a country whose dominant industry is steel. On top of that, a forward-looking government pursued diversifying policies that attracted investors from around the world and aligned industries with other European nations through the European Economic Community (EEC), a predecessor of the EU.

By the time of the oil crisis in 1975, Luxembourg had 23 registered unemployed. No, I didn’t forget a unit there. Less than two dozen Luxembourgers were registered as unemployed in 1974.

The decade of the oil crisis saw a massive reorganization of industry and government as Luxembourg tried to weather to storm. A fundamental change was the creation of the Tripartite Coordinating Committee. The government was heavily involved in industry (holding a majority stake in the monopolist steel company), and from the 1970s onward, it would do so in a tripartite arrangement: requiring the approval of business owners, labour leaders and public officials. This restructuring alongside other very generous social welfare reforms allowed the Luxembourgish steel industry to survive the crisis and remain an important industry even today.

In the final two decades of the twentieth century, Luxembourg hit its first real boom. Ventures into the financial sector and IT alongside a very friendly tax environment (for both businesses and wage-earners) led to an average GDP growth per annum of over 5%, just behind Ireland, who is often hailed as the great European success story.

The next two decades were even better. With only a small faltering after the 2009 financial crisis, Luxembourg’s GDP has increased every year since 1980.

Good timing, a proactive and nimble government, and some valuable expertise have set Luxembourg in the perfect place to ride the waves of the global economy all the way to immense prosperity.

But this doesn’t feel particularly satisfying because lots of countries are in finance and IT. Lots of places can be seen as tax havens. What makes Luxembourg so special?

I’m going to offer my own hunch here. I think it stems from two things:

  1. They were first. This reorganization took place in the 1970s and 1980s. Most of Europe was still recovering from the war, the Asian Tigers were just starting to figure out how to do modern economies, Latin America and Eastern Europe were mostly trying to figure out how to get rid of totalitarianism, and the US was already too big and diverse to make sweeping reforms.
  2. Labour protections. Wages pegged to cost of living, tripartite decision-making, and strong unions. Luxembourg requires that employers pay fairly, and business-friendly policies attract the kind of capital to make such pay possible. This way, Luxembourg actually pays lower than the EU average in wealth redistribution, yet the minimum wage is about $28,000. That would be about $15/hour.

There is another reason why Luxembourg is the wealthiest country in the world per capita:

Lazy statistics.

Typically, GDP is calculated as the amount of money earned in the country over the course of the year divided by the average population over the year. That would give GDP per person, right?

Kind of.

Here’s a fun fact: about 40% of the people who work in Luxembourg don’t live in Luxembourg. Another third are immigrants and the rest are actually Luxembourgish. I’m guessing that’s why the UN statistics put Luxembourg third behind Liechtenstein and Monaco. Although it skews the data a bit, even correcting for it leaves a GDP per capita of over $100,000 (on the same scale, the US is at about $60k).

I think what you’re seeing when you walk around Luxembourg City is that the only people living there are the ones who can afford to stay. The ones who can’t afford to commute live on the outskirts of town (there are outskirts, and they’re definitely less pretty). The rest live comfortably in places that are a bit less expensive, but they can afford to commute.

So why is Luxembourg so rich? They work with money. It’s the best way to make money.

dammit, I knew I should have gone into finance…


Mullerthal trail


These are the kinds of German forests that must have inspired Grimm’s fairy tales.



Monument to the United States military that liberated Luxembourg twice.



Upon crossing the bridge into the old city, my first reaction (and I think many others’ is too) was “Is this place real?”



The city is immaculately well tended.


A (very) abbreviated (unverified) history of the Netherlands and Belgium (sort of)

Today’s photo: A random shot from a bridge while meandering through Rotterdam last Friday evening. In all our wanderings, Ashley and I have been very good about taking shameless selfies, but somehow we completely forgot to take pictures in Rotterdam. This is all you get. Sorry.

Backstory: The whole reason Ashley is staying in Europe for the summer is that she figured out how to take all her summer courses online. Fortunately, that means she has plenty to keep her occupied while I’m at work. Unfortunately, that means she sometimes has to study on the weekends. Last Saturday, we stopped at Hopper Coffee in Rotterdam, so Ashley could get some work done. I took the opportunity to educate myself about the flat little country we were visiting for the weekend. Here’s what I accomplished in the three hours while Ashley was fighting with the (extremely uncooperative) Kindle version of her textbook:

Starting from the very beginning, we set a hard limit for the earliest point of any human history in the region English speakers often mistakenly call “Holland” but should actually call it “the Netherlands” and that the Dutch call “Nederland”, which literally translates to “low country”.

Paleontologists estimate that humans left Africa about 50,000-60,000 years ago. They probably took the route across Arabia and up through the Levant (present-day Syria and Iraq). If you’re just looking at a world map, it would seem most logical that they would then continue north to where they are now throughout the European peninsula. However, some research suggests that they continued north through the Caucuses and around the Black Sea to the north. Either way, best estimates put the first Homo sapiens settlements in present-day Europe at about 40,000 years ago. I used the species name intentionally. Homo sapiens were not the first humans in Europe. Homo neanderthalis were already here. There is strong evidence that H. sapiens interbred with H. neaderthalis throughout their journey from the Levant to Europe (whichever direction they took).

However, those first people to reach Europe may not have been our ancestors. Despite the continued interbreeding, we Europeans have no more Neanderthal blood than our cousins in Asia or the Americas. This suggests that the first people in Europe actually went extinct. There were probably a series of waves of humans, who were genetically similar enough to reproduce with one another, who populated Europe over the past 40,000 years.

These tribes of people lived in hunter-gatherer societies for thousands of years. The first people to start living in settled farming societies in the Netherlands are known as the Trechtervolk, who lived in the northeast of the Netherlands. Very little is known about these prehistoric people, but they had spread out throughout the Low Countries over the ensuing 3,000 years. As the beginning of the Common Era approached, the Romans began to expand their empire to the north, first led by Julius Caesar in his slaughter of the Belgae, the people of the Low Countries in Antiquity. They were brought under Roman control around 12BC under Caesar Augustus and remained part of the empire until the decline of the western Roman Empire in the fourth century.

When Western Rome fell, the Low Countries were mostly autonomous and under Frankish control. The Franks were the early kings of the people in the lower Rhineland region at the edge of Roman control (if your European geography is about as good as mine, you’ll need the hint that the Rhine river winds through the western German cities of Cologne, Dusseldorf, Bonn and Basel before draining into the sea at Rotterdam). They weren’t officially Roman, but some (the Salian Franks) were permitted to live within Roman territory. A military general names Childeric I is regarded as the first of the Merovingian line and fought for control with a seemingly autonomous Roman General for the Rhineland in the decade prior to the fall of Rome. He and his son Clovis I ruled in a form of kingship likely modeled on that of Alaric I, who was elected king of the Visigoths after the death of Emperor Theodosius in 395 (Theodosius was the one who first split the empire, and his sons basically started a civil war using Germanic tribes, and Alaric I was the one who sacked Rome during this sort of civil war).

As Rome receded to its new base in the East, the Low Countries occupied themselves in such local matters as to keep me from finding out really anything between the rise of Clovis I in the last decade fifth century and the first attempts at Christianisation by British missionaries in the eighth century.

The period of 800-888 CE is officially known as the Carolingian Empire, starting with the crowning of Charlemagne as Emperor of Rome, thus marking the revival of the Roman Empire. This empire encompassed most of modern-day France, Belgium, the Netherlands, Luxembourg, Switzerland, western Germany, and northern Italy. Obesity struck even in the early Middle Ages, and the empire split up after the death of Charles the Fat in 888. The empire was revived again in 962 with the rise of Otto I, now calling it the Holy Roman Empire. The empire encompassed basically the same borders minus France. I like to the think of the Holy Roman Empire as Germany in the Middle Ages.

The Hanseatic League of powerful merchants in the North Sea saw much power shift to the private sector in the Netherlands in the 14th century. This focus on seapower would lead to the Golden Age of the Netherlands in the 16th century with the massive fortunes brought in by the Dutch East India Company. 

In the middle of the 16th century, the Netherlands was still under the control of the Holy Roman Empire, now ruled by the Hapsburg family. Emperor Charles V abdicated, giving his son Philip II control of the Hapsburg Netherlands. Though technically under the control of the HRE, the Netherlands was mostly governed by a union of seventeen republics, who maintained similar legal codes (ones very friendly to trade and very much shifting power to local control). 

However, Philip was the son of the Queen of Spain, Isabella. She was, more importantly for the Netherlands, Catholic, and Philip was a mamma’s boy. He had no patience for the rise of Protestantism in the Netherlands and made it a point to reinstate the control of the Catholic church in the region through counter-reformation (an Inquisition in the Netherlands). Many Dutch nobles who stood to lose greatly because of the reorganization of the church, engineered the recall of the guy who was supposed to lead the whole reorganization. This coup was led by William, Duke of Orange, who is seen as the Father of the Netherlands. They tried to get Philip II to back off, but he refused. Protestant rebellion broke out and thus began the Eighty Years’ War.

During the war, the Republic of the Seventeen Provinces became more powerful and unified in their fight for independence. Unification would not last, and the Peace of Westphalia (1648) that ended of the war also divided the Netherlands into the Republic of the seven provinces (north) and the Spanish Netherlands (south; more or less the region we now call Belgium). The Republic was independent, but the south remained under Spanish control. The bankrupt Spanish empire consistently gave up territory to France (thus giving rise to French-speaking Wallonia) over the course of the seventeenth century. In the Netherlands, the Republic maintained control through most of the 18th century. In 1795, the French revolution spilled out of its borders and conquered the Netherlands to form the Batavian Republic. Britain capitalized, gobbling up most of what was left of the Dutch empire overseas. In 1806, Napoleon appointed his brother, Louis, King of the Netherlands, but he took back the decision in 1810 when Louis started being a bit too sympathetic to the locals. The British liberated the Netherlands in 1813 on the road to defeating Napoleon once and for all. With the fall of Napoleon at Waterloo in 1815 (on the border between Flanders and Wallonia), the Netherlands was united from Groningen to the Ardennes for the first time in over 200 years under Kind Willem.

And everybody lived happily ever after.

Just kidding. Revolution broke out again in 1830, and Belgium formed its own sovereign state in 1839, thus relegating it to two hundred years of political infighting and developmental sluggishness.

That’s about as far as I got. I might finish the story, but I really should do Belgium first because it is about to become the country where I’ve had the longest residence since I left the US in 2015.

Rond Ter Streep op de fiets

I have made an almost complete survey, and I can say with high certainty that Ter Streep is indeed still an island. If you read my first post from Oostende, you may have caught that the origin of the name Oostende (literally “east end”) actually does make sense even though it is in the far west of the country. The city was on the east end (really, the northeast end; the coastline runs basically SW-NE here) of an island called Ter Streep. After a few centuries of ambitious civil engineering, this island has been brought into the mainland. Almost. The water that separates Ter Streep from the rest of the country has been reduced to a series of canals, perhaps a meter deep and a few meters across at some points. But it does appear that Ter Streep is still only connected to the rest of the country by bridges.

I confirmed this by circumnavigating the island. It took me a few hours, but I could have done it in half that if I didn’t stop every 10 minutes to take pictures.

screen shot 2019-01-06 at 2.04.34 pm

Google Maps will tell you it’ll take several hours, but Google’s rider is on a rusty old fat tire. My new machine moves a bit faster. Indeed, it startled me how much this horse wants to jump out from under me when I crank on the pedals. I’ve made quite a leap from the aluminum wreck I wrote about last weekend.


I mentioned last weekend that my new ride just wasn’t very enjoyable to ride. Getting my new Orbea up to speed is sheer joy. That’s the way a bike should be. I honestly didn’t think I’d own a bike like this anytime soon. I’ve had to do some creative budgeting, and I’ll need to make some sacrifices, but it’s about priorities. And when a bike like this in on 25% discount, it’s very hard to pass up.

My ride this morning started before sunrise, but the bike paths in the city are fairly well lit, and I got a pretty powerful headlight. In a place where daylight hours bottom out around eight, I figured it was a good investment. It was the intention to circumnavigate the island, so it started by getting out to the first lock of the canal that forms the southeast side. There are a handful of historic buildings at the junction, which was once a guarded entrance to a Spanish fort. It is also a popular meeting place. As I was figuring out which way I wanted to go, a group of cyclists started to form. They kept looking at me, and I guessed they were trying to figure out if I was joining them. They were headed toward Bruges, but they were going offroad. Most of them had mountain bikes. And they were properly outfitted in matching spandex. They were only the first of several such pelotons I saw today.




They headed east to Bruge, and I headed south along the canal. The bike trail continues almost uninterrupted all the way to Westende (and maybe next time I’ll turn left to take the route to Dunkirk). But I kept getting distracted by things in the middle. Including this random little nature reserve.


Of course, I had to go check it out.


Soon enough, I bypassed the town that marks the middle of the island, Middelkirke (“middle church”), but it didn’t take long to get to Westende.


Although I don’t buy into the myths and ceremonies that the building was constructed to support, I find the social utility of such a conspicuous and beautiful civic center very charming. Even though most Europeans aren’t religious anymore (apparently I qualify as “Christian” by Belgian standards because my family celebrates a purely secular Christmas), there is definitely a community culture here. People seem driven to participate in local events and take pride in their communities. I’ll have to dig into specifics at some points, but that’s a feeling that I’ve gotten throughout northern and western Europe.


There’s a focus on more than just utility here. Even simple buildings are aesthetically pleasing. Few buildings are merely a collection of walls to accomplish some purpose. Even new buildings copy the traditional style with distinctly 21st-century additions.


Ashley had a conversation with someone a couple weeks ago who claimed that Belgium got something like 50% of their electricity from renewables. In truth, their goal for 2020 is to get 18%, but I can see where there’s confusion. Everyone has solar panels! What more electricity could we need?!

Do you think those panels are generating much electricity with that kind of sky? No. And it’s like this most of the year. It’s a nice gesture, but there are a hundred better ways to spend that money to increase renewable energy. Here’s one of them:



A combined wind & solar farm that powers probably a couple thousand homes. They’re old turbines. The ones with the boxy nacelle (the house on top where the blades are attached) are 900kW machines. The next wind farm Parkwind builds will use turbines that are 10 times as powerful.


Orbea should pay me for advertising. I wonder if they pay for renewable energy for their factories? That’d be cool.


Finally, I reached the end of the island and on the other side of the water, I found Nieuwpoort. I hope I don’t have to translate that one.

I thought Oostende was cute, but this takes it to a level that’s actually a bit uncomfortable.



The way back was far less distracting. And I also threw off my elevation measurement because I climbed an observation tower. It says I gained 84m on that section. That was almost all on the tower.

I once made a comment that Rotterdam was flatter than Kansas. Seems to be true throughout the coastal areas of the low countries.


When I reached a section that follows the beach, I stopped while I was walking my bike over the piles of sand that had blown onto the walk. Having recently watched a documentary on World War II, I thought about how Oostende could have been the site for D-Day.


When I turned around, I realized that Hitler had the same thought.


This area is teeming with history. The system of canals has been in progress since the British and French were bickering over their colonies in the Americas. The layouts of the streets can probably be traced back to the Middle Ages. This beachfront has concerned military commanders since amphibious assaults became a viable military tactic, and many of the fortifications the Nazis had hoped would keep the Allies from opening up a second front in Western Europe are still here.

And now that I have a liberating mode of transportation, I get to go see all of it!



Mina första dagar på Gotland

I knew there was a catch. There had to be a catch. This place was too perfect. My room is small but clean and just big enough for all my stuff. The house is cozy and well-equipped. My roommates are fun, engaging, and mature. My landlords are incredibly kind. The town has been just lovely. It takes only a quarter of an hour to cross the cobblestone streets of the inner city, protected from the fully modern world by a stone wall that has stood for over seven centuries. Yet, within these walls, I’ve found all I need. On my first day I was able to secure a reliable bicycle that will be my means of touring the island and order the necessary part to repair my guitar. I had almost fallen in love with this city when I realized the catch: undergrads.

It was only a matter of time before I got sick. The pattern continues as my immune system crumbles after about a month in a new country. It hasn’t been horrible. I’ve even been able to tour a bit outside the city on my bike in the depths of the illness, and I think I’m just about out of it. However, not wanting to be sniffling my way through the first day of class, I’ve been strict about resting over the past few days. My neighbors, however, had other ideas.

I had shaken off the headphones that had helped lull me to sleep. I had turned in before 9pm, intending on getting a solid eight or nine hours of sleep. Yet, with my ears again exposed, my mind awoke to the shrill shredding guitars of death metal. The paper thin windows made it seems as though the party were on my balcony, not two doors down. I awoke feeling surprisingly rested, but a glance at the clock told me I would regret starting my day. It was just past 2 am.

The music had come from a different party last night, and it must have ended earlier because I was able to sleep through the night. This fest, however, was more persistent. With a cup of chamomile tea, I gazed at the stars from my balcony until the music subsided at nearly 3 am.

The strangest part of the episode was, however, that I kept my frustration in check. Perhaps it has been post-adolescent calming of nerves, but a significant factor last night was the fact that I was enjoying the music. As I tried to fall asleep again before resigning myself to tea, I found my feet bouncing in rhythm as they hung off the edge of the bed to the rapid thundering of Pantera. Yet, good music keeps me up just as much as bad at that volume. When someone finally had the sense to turn it down, I could only hope that this was only a final celebration before classes resume. Yes, I understand it’s Saturday night. I guess I’m just getting too old for this shit.

Anyway, I’ve used my weekend to do a bit of exploring and get some active rest. My trusty bike already has several dozen kilometers on its old wheels. I intend to make it worth every crown I paid for it.

Yesterday’s exploration took me south along the coast. I first located an ecovillage called Suderbyn. They are a sustainable community that strives to show how small communities can operate in harmony with their environment by growing their food using sustainable farming practices, generating their own power or tapping into renewable energy sources, and sharing their knowledge through local and international seminars. It was still early when I arrived, so I just read a few of the informational posters, but I will have to return to get a full tour.

On my way back, I detoured out to the coast to Högklint, the tallest cliff in the area from which much of Visby is visible. Already windy inland, the gusts whipped the straps of my bag violently as I tried to snap photos. Trails below me and anchors on top indicate that this area is popular for rock climbing. I plan to join a local climbing club (which has build a climbing was inside an old grain silo), so perhaps I’ll make the next ascent vertically.

This morning, I just went for a stroll through the city. It was very quiet on this Sunday morning; just the way I like it. There are ruins dotting the old city. They are mostly churches from the twelfth and thirteenth centuries. There were fourteen in all, but now only the large cathedral remains in tact and still holds services.

I wandered outside the wall on my way back. It still amazes me that the wall is in such good repair after centuries of neglect. It was originally erected at the end of the thirteenth century by the wealthy merchants to defend the city against the peasant farmers who would eventually be competed out of the trans-Baltic trade. The wall succeeded in protecting the merchants in an early fourteenth century civil war, but it did little when the Danes invaded in 1361. It was not siege warfare that brought down the city, but the display of brutality when the Danes slaughtered thousands of farmers (whose numbers had plummeted after the plague struck a decade earlier) just outside the walls. The people of Visby capitulated, and the island fell under Danish control for two centuries.

I’ll try to add these tidbits of history to these posts. This island has an incredibly interesting past. As a hub of trans-Baltic trade, it changed hands several times during the centuries when northern and eastern Europe depended on this trade route.

cykel stor

My new steed


The Gotland countryside is basically a vast array of farms.


A windy blue day on cliffs

Visby vägg

The wall remains mostly intact despite Gotland’s collapse after the Danish invasion in 1361.

visby väggstor

Many of the 13th century buildings remain because no one had the means to tear them down after Gotland’s economy collapsed after the Danish invasion of 1361.