Jan Grarup for The New York Times || Robert Nielsen, 45, said proudly last year that he had basically been on welfare since 2001.
Danes Rethink a Welfare State Ample to a Fault
By SUZANNE DALEY
Published: April 20, 2013
I’ve always found the NYT generally more nuanced than it rock ribbed critics make it out to be.
And you could say that this article supports welfare reform, tax reasonableness, fairness etc … Until you think a bit more deeply.
“Denmark is what progressive New Yorkers want to be even if they don’t know it,” the ‘Smithsonian’ liberal in me jeers. The Danes start from such incredible heights of social redistribution it would take huge changes to get it down to the fondest dream of leftish US liberals. In regards to this article, a progressive could comfortingly say “yes welfare can go to far” and then finish with “but we ain’t even close yet.”
This is a tiny, densely populated and historically rich and educate European nation. The Danish welfare state, the Danish tax regime, the Danish government, the country of Denmark…are simply impossible to compare to the US equivalents. It has no real international borders, a proportionally huge and productive coast (the US would count the whole country as a coastal region) it’s comparable to New York City and environs in size and population, it’s highly educated, pretty homogeneous and highly protected from outside threat. Things that work in Denmark simply cannot work in the US because of scale…and even in Denmark the Danish system is tottering.
As a Danish citizen do I support the many reforms we are implementing in Denmark in order to improve our competitiveness and long term finances and expand the size, qualifications, mobility and productivity of the labour force.
It is worth pointing out that
1) Denmark has very low net public debt (much lower than the German one)
2) Denmark has huge current account surpluses
3) Danish state finances are long term a lot more sustainable compared to most other countries and compared to what people assume when they look at the country.
a) There are automatic increases in retirement age if average living age increase and the early retirement systems are being phased out
b) Healthcare reforms are improving the productivity of the healthcare sector and creating a situation were healthcare cost as share of GDP has been falling for several years. It cost approximately 9% of Danish GDP in public spending to run the tax-paid universal healthcare system. The US Medicare and Medicaid system cost approximately 8% of the US GDP despite not giving the population the same healthcare coverage as the Danish system
c) The Danish population is still expanding in size and amount of childbirths have for many years been in the higher end in Europe
4) The Danish tax system is more transparent. In Denmark are taxes almost always called taxes . In many other countries do they camouflage taxes as mandatory health care coverage or mandatory social contribution paid by the employer.
5) There has been lots of reforms in recent years in order to improve competitiveness, long term public finances and finance tax cuts on labour and companies. Compare that with many other countries there has been forced to increase taxes in order to handle their huge deficits. The Danish deficit is low and for several years has the realised deficit at the end of the year turned out to be lower than budgeted
6) Inflation in Denmark is currently the 5th lowest in Europe and despite that average salary increases has been low compared to Germany are Danish real wages growing due to the very low inflation and this is happening in a situation were taxes has been reduced on labour income and were consumption fees on cross-border trade sensitive goods are being reduced. Basically, Denmark is winning competitiveness against Germany despite the population experiencing real wage increases.
It is also worth pointing out
It is not a problem with the ageing of the population due to the automatic increases in retirement age when living age increase. lots of commentators look at the share of the population over 65 and then concludes “this will be a problem” but the automatic increases in retirement age when living age increase do mean that for my generation (I am 36) will the retirement be something like 71. During the last few years have there been so many reforms in Denmark that we in the coming decades can expect an expansion of the labour force with something like 300000 in a country with 5,5 million inhabitants. Simultaneously are lots of public funds being invested in upgrading the qualifications of the labour force and invested in infrastructure and science.
Basically, Denmark is re-prioritizing public funds. Less money is spend on social transfers and public employees. More money is being spend on public investments in infrastructure, science and education in order to improve long term competitiveness
The way I see it the Danish economy is probably as diversified as the US economy, it’s a matter of complexity driven by the scale of the US economy / geography as well as society / demographics.
I think your point about the differences in how the US and Denmark are retooling, are interesting and to the point, again caused by the above differences.
Aging of the population should really be a good thing as long as healthy life span is increasing at least as quickly as total life span. It only becomes a problem when humans (politicians) assume that something is fixed or guaranteed. The general retirement age should never have been fixed it should have been derived from some actuarial calculation ~ any individuals retirement age is not set till the last half decade or so to give the person, family, employer, etc time to plan.
It is also worth pointing out
Denmark has been quite active with military actions
1) Denmark send ground troops to the balkan wars,
2) Denmark send ground troops and navy units for the invasion of Iraq
3) Denmark send ground troops and air force units for the invasion of Afghanistan
4) Denmark send air force units for the war against Libya
5) Denmark send navy units for the hunt against somali pirates
6) Danish fighter jets has frequently been on NATO air patrols over the baltic states and over Iceland
7) Denmark send logistical support to help the French operations in Mali
Also worth pointing out that Denmark do have borders of international importance:
a) Denmark controls the strait access to the baltic sea that is the deep water access for large ships using east european or russian harbours
b) Greenland is a Danish territory, that is, Denmark controls the north pole and that is of strategic importance with the new arctic shipping routes from Asia to Europe and the more historical strategic importance of Greenland being on the direct flight path for missiles launched from Russia against the east coast of USA
Everything agreed to and noted, the Danes are a good example of getting nationhood as right as humanly/politically possible and they often go well above and beyond. That’s one of the reasons I see it as a beacon for progressives.
Defense wise I think the historically strategic position keeps the Danes very aware of the potentiality for trouble while its geographic / political position (in this epoch) provides an opportunity to pick and choose: when, where and how much to engage in ‘operations,’ though again there is no denying Denmark plays well “above weight.”
I did not mean to slight Denmark in any way, i was trying to emphasize that the US cannot be Denmark. Social history, demographics, sheer size, a hugely more complex economy, an utterly different world position, make it impossible. The US progressives who yearn for a Danish like US are not understanding the country beyond the East coast ‘Acela corridor’ that on its surface looks like it could be similar.
Thanks for the comment..
In many ways are Denmark having the same degree of complex economy as USA. One of the hallmarks of rich countries are diversified economies since that make it possible for labour and companies to move activity from one sector to another if one sector face economic decline.
As far as i know are Denmark having one of the worlds most diversified economies
Denmark and USA also have flexible labour markets in common. The Danish labour market is one of the worlds most flexible in order to make it fast and inexpensive for companies to adjust to changes.
It is one of the reasons that the conservative Heritage Foundation in USA usually ranks Denmark at the same degree of economic freedom as USA. Last time I checked was Denmark ranked a little bit more free compared to USA.
Denmark and USA have something else in common but obtained in different ways:
Both countries are good at reforming the economy in order to regain competitiveness if it is necessary to do so.
Denmark is doing so via a political system there is able to implement the necessary reforms and USA is doing so via the private sector
Worth mentioning that the next Danish competitiveness and growth improvement reform package was agreed tonight with a massive majority in the Danish parliament
Reductions in corporate taxes, reductions in electricity and pollution fees for companies, improvements to credit access to small and medium sized companies and more funds for helping private sector research. It is financed via reductions in public spending and via Dynamical effects