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Denmark: Land of the Free

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DenmarkLand of the free

Denmark has a prosperous, competitive economy. According to Forbes Magazine, it has the world's "best business climate." It also has a very generous system of social benefits.

Denmark has the world's lowest level of income inequality and its highest minimum wage. Most wages are set by negotiations between groups of unions and employer federations.

Unemployment benefits are higher than in the U.S., and last four years, compared to the American standard period of 26 weeks. Moreover, when employees lose their jobs, they're immediately eligible for government-financed re-training. Denmark's current unemployment rate is a low 4.1%.

All workers are entitled to five weeks of paid vacation. The government pays for at least 75% of day-care, which enables most mothers to be part of the work force.

Denmark has a statutory parental leave period of 24 weeks. Most workers receive full pay during this period under collective agreements. The rest get at least 60% of the maximum unemployment benefit.

The Danish health care system is universal and compulsory. It is funded by the central government through an 8% tax on income, and is mostly free at the point of use, except for co-pays for drugs and dental care. Per person, it costs about half as much ours. Danes express a very high level of satisfaction with their system.

Needless to say, all these benefits are paid for with high taxes. They consume around 50% of Denmark's GDP, compared to 28% in the U.S.

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To Republicans, Tea-Partiers and talking Fox heads, Denmark must seem like a "socialist"hell on eartha nation crushed by taxation and oppressed by the heavy hand of Big Government. Yet, according to OECD and other surveys, Danes are among the happiest people on earth, full of satisfaction with their lives.

Perhaps the Danes just don't get it. Maybe they're happy slaves, wallowing in a nanny state, content to trade their freedom for economic security. Have they become what Arnold Schwarzenneger called "economic girlie-men"?

Then how can "socialist" Denmark have what Forbes calls the world's best business climate? [Forbes explains that the goal of its ranking is to "quantify for entrepreneurs and investors . . .what they would consider desirable conditions for business."] Why would investors and entrepreneurs be interested in such a place?

Perhaps the Heritage Foundation can help us here. This very conservative think tank, together with the Wall Street Journal, annually ranks countries according to its "index of economic freedom."

For 2009, Hong Kong ranks 1st with a score of 89.7 out of 100. Canada (with its single-payer health insurance) is 7th, scoring 80.4; the U.S. is 8th with 78; and Denmark is 9th. With 77.9 (nearly the same as the U.S.).

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The Heritage ranking has a strongly market, capitalist orientation. So Denmark loses many points for high taxes and government spending. Yet it is still as "free" as the U.S. That's because, according to the Index, it significantly outperforms the U.S. in such categories as "business freedom," "investment" and "financial freedom."

Most striking of all, it has nearly the same high score as the U.S. in "labor freedom." This category is dear to the hearts of American conservatives. As Heritage says of Denmark: "The non-salary cost of employing a worker is low, and dismissing an employee is relatively easy and inexpensive."

Danish unions and management have agreed to this labor flexibility as part of what they call "flexicurity." The security that compensates for the flex is, of course, high unemployment benefits that include free re-training.

The lesson to be learned from Denmark is that you can have both a competitive free market economy and a comprehensive welfare state with a strong union role.

For the last nine years Denmark has been governed by a center-right coalition that has no quarrel with flexicurity and generous social benefits. As Danish Employment Minister H. C. Fredericksen said in a 2008 interview, "I think the idea that you have to starve the public sector to have a prosperous private sector is long out of date."

There are many reasons for the persistence of this out-of-date view of capitalism in the U.S. Among them is the vague use of terms such as "freedom" and "socialism." In Republican and Palin discourse, they have little more meaning than "yeeay!" and "yucky!"

The traditional meaning of socialism is government control of the means of production. Moderate socialists tolerate some degree of private ownership of the means of production, while communists have emphasized government domination of the economy. Denmark is not a socialist country. As the Heritage Foundation says, "Most [of its] industries and businesses are now in private hands."

In addition to "freedom" as defined in the Heritage Index (a freedom plentiful in Denmark), there is another important kind of freedom, one which is jeopardized by extreme economic inequality.

Money is power. Too much of it in too few hands concentrates power in the wealthiest class at the expense of everyone else. The very high level of economic inequality in the U.S. makes it a lot less free than Denmark.

 

I'm a retired philosophy professor at Centre College. I also am a regular columnist for our local paper, The Danville Advocate-Messenger, as well as the Lexington Herald-Leader. My last book was Posthumanity-Thinking Philosophically about the Future (more...)
 

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Even Forbes Magazine and the Heritage Foundation g... by Brian Cooney on Tuesday, Apr 13, 2010 at 6:31:20 AM
The Nordic countries (Scandinavia + Finland) still... by Daniel Vasey on Wednesday, Dec 18, 2013 at 4:23:12 PM
Thanks for the info.... by Brian Cooney on Thursday, Dec 19, 2013 at 9:34:31 AM