Denmark, Democratic Socialism, and Dreams of Adoption

maxresdefaultIn a recent facebook discussion on the merits of capitalism vs socialism (“democratic”, of course), I concluded it by asking my friend to take some time and pick a specific country that we should look to as an ideal model, and I would then offer my comments.

I suggested this because it’s difficult to argue against the nebulous collection of countries that are often referenced in these discussions. It’s hardly sporting to offer only the highlights of each divorced from their flaws. While there are many similarities with the various “democratic socialist” countries (such as the Nordics), they each have unique issues and unique things about them that grant what success they do have.

So far, I have not been given a concrete choice, but a casual reference to a video on Denmark was offered. Given that breadcrumb, and the fact that Bernie Sanders has certainly found this country of interest, I’m going to go with it for now. And why not? They have free education and healthcare. They seem to be happy, and they have legos, pastries, and promiscuity. What more could one ask for?

Let’s take a deeper look at what it’s like to live there, what factors go into making it a success, and what is at odds with the progressive narrative. There’s a lot to cover, so I’ll start by giving a bullet list of basic observations about the country.

TAXATION

  • They are funded by one of the highest tax rates in the world, topping out at 56%.
  • Even the lowest wage earners pay a labor market tax of 8%.
  • Additional municipal and health care taxes of over 25% kick in for wages over 5.4K (US dollars). As their government site says, “All citizens use the public sector in some way, and as a general principle all citizens must thus help pay for it.”
  • A further progressive tax applies, with the top rate starting at only 58K (US dollars).
  • They have high capital gains and inheritance taxes.
  • There are limited tax loopholes and deductions.
  • Salaries are average to low compared to the other Nordic countries. While they are higher than the US, they are not that much higher (approximately 10 to 30 percent).
  • They have a 25% VAT, which applies to almost all purchases, including food.
  • They have an automobile tax of up to 180%, and fuel prices are nearly double our own.
  • Even welfare is taxed.

GOVERNMENT

  • They have one of the world’s most transparent and least corrupt governments.
  • Government is focused on efficiency and debt avoidance. Their debt to GDP is about a third of our own.
  • The Danes have a high level of trust in their government.
  • They have one of the highest government employee rates in the EU.
  • They have a history of privatization, deregulation, and restructuring.
  • They have in recent years conducting tax and welfare reforms, which are being accelerated now due to the immigration burden.
  • Immigrants are paid only 50% of the welfare benefits of citizens.
  • They are starting to impose intrusive and draconian laws upon immigrant ghettos.
  • They are more business friendly than the US.
  • They have low credit market regulation. During the recent banking crisis, they took a hands-off approach.
  • Their Prime Minister has said: “Denmark is far from a socialist planned economy. Denmark is a market economy.”
  • They have low military expenditures. As an ally of the US they can afford the luxury.
  • The government insures that “education programmes are of…relevance to society and are oriented towards the needs of the labour market.” Meaning, they are a little light on superfluous humanities majors.

ECONOMY

  • There is a very high cost of living.
  • They have a relatively low (22%) corporate tax.
  • The poverty rate has recently been increasing.
  • Native born Danes in the US have the 5th highest per capita income of any national group (Indians and Asians tend to top the list).
  • They have the highest private debt in the world. (I saw a quote from one Dane that might explain this: “and if you end up losing all your money on the stock market? The welfare state will be there for you”)
  • While they are economically successful, they have a much lower GDP per capita than the US.
  • They historically have had low unemployment and thus fewer people on welfare.
  • They have a booming black market (a shadow economy).
  • They did not adopt the EU currency.
  • They have one of the highest ecological footprints per capita in the world (because of agriculture and pig farming).
  • They have no overall minimum wage.
  • Once a woman has her first child, gender pay “inequality” becomes 20 to 30 percent for years to come.
  • Oil revenues have historically provided government funding, and more recently helped to fund the transition to green energy.
  • The country became economically successful before becoming a welfare state.

HEALTH CARE

  • Physicals, vision, mental healthcare, dental, and most prescription costs are not covered.
  • Dentistry is expensive, and it is not unusual for Danes to go abroad for dental care.
  • Doctors do not need malpractice insurance. Litigation is handled internally, and compensation is generally modest.
  • They do not require doctors for all procedures, for example, they use midwives.
  • Private insurance is still available to get better, quicker, or more selective care. Some companies offer this in their benefits package.
  • Pharmacies are government run.
  • All health care routes through your selected doctor. You must see specialists only on their recommendation. Only a minor inconvenience, unless you are in a rush or don’t like your doctor.
  • Involuntary euthanasia is a largely accepted practice.
  • Elective abortions are only permitted up to the 12th week. Proof of need and state approval is required after that. Under 18 requires the consent of parents. The laws are even more restrictive on the Faroe islands.

PEOPLE

  • They are very culturally homogenous and resistant to immigration.
  • They tend toward conformity and seek to be average (see “Jante Law”).
  • They have high trust in each other. It is common for them to leave their sleeping babies alone outside of shops and homes.
  • 85% of the population votes.
  • The country is considered boring by many who live there, and tourism is low.
  • There is a high amount of drinking, especially in the youth.
  • They have one of the highest rates of physical and sexual abuse among women in Europe, and Europe itself has high levels.
  • They have the highest number of single parents in Europe, and a growing number of single women who become parents by choice (via sperm donors).
  • They have one of the highest burglary rates in Europe.

GENERAL LIFE

  • They are considered “the cancer capital of the world.”
  • Baby names are regulated by the government.
  • You’ll likely be charged for a glass of tap water at most restaurants.
  • Even though they rank 2nd place in the EU for gender equality, women are substantially underrepresented in STEM fields and academic positions.
  • They have a state church, of which nearly 80% are members, and you must pay a church tax to belong.
  • Only approved and documented immigrants can receive welfare benefits.
  • While small in number, Denmark still has homeless people.

CONCLUSION

Many of my observations would apply to the other “socialist democracies,” particularly the Nordic countries. While some things may be better in these other countries, in other respects things are more extreme. For instance, in Norway, the cost of living is even higher, substantially more of their government funding comes from oil revenue, abortion is virtually impossible after 22 weeks, and they are not even members of the EU. In Sweden, there’s an even bigger black market, more immigration and violence, and they are finally tightening up immigration laws. Sweden’s military spending is even lower (per capita) than Denmark’s, they have laws to restrict spending and keep the budget balanced, and there are education vouchers that can be used even at private schools.

It should also be noted that there are things about Denmark and its tax burden that are not true of the US. For instance, their high auto taxes and gas costs are not as impactful in Denmark, because it is a small, flat country and many people choose to bicycle. They are also adjacent to Europe and can shop abroad for economic relief. The US is a large and fairly isolated country. Inescapable and high consumer prices would hit our low income citizens the hardest. We should expect a subsequent black market to emerge, just as it did in Venezuela and the Nordic countries.

While the benefits are seemingly good in Denmark (primarily for the young and old), the people pay a very high price for them. It should be noted, though, that they all chip in, not just the rich. Unless you are in the lowest classes, you are directly paying for most of the benefits you receive from the government. While some may prefer to pay the government to mediate their health care and education it should be understood that they will pay a premium to do so. For the additional money I would have to pay in Danish taxes, over the course of my middle class lifetime, I could probably afford a second insurance policy, 4 master’s degrees, and extra money to pad my 401K. If the US is to go this direction we need to do so with honesty about what it means for each of us to get there. We can hardly blame those who balk at paying the government to do for them what they would prefer to do for themselves, much less paying the government to do for themselves *and* others. Forcing compliance upon such people is still tyranny, even if the majority of the country thinks it the “right” thing to do and casts their lot in favor of it.

If we indeed went the way of Denmark, we’d want to insure that our heavy tax burden was not wasted. Denmark’s government cares about corruption, inefficiencies, and debt. It isn’t afraid to privatize, shut down departments, reform and simplify taxes, and throttle benefits. We have to learn the lesson that you can’t fix all problems by simply throwing more money at them.

Additionally, we have to stop demonizing capitalism and idolizing successful “socialist” countries as though they are a radical departure from it. Denmark certainly is not. It’s Prime Minister rejects the “socialist” label entirely, and says that “it is a successful market economy with much freedom to pursue your dreams and live your life as you wish.” You can’t retain immunity from the taint of Venezuela and other failed, truly socialist countries and also disparage the principles of capitalism.

To generate the massive revenues needed to support not just a welfare state, but a quality one, we have to respect the free market and foster its growth and stability. It’s only to the extent that the economy is good that you can burden it with taxation. I don’t think anyone’s arguing that a free market economy does not generate wealth, only that it generates so much that the captains of industry make the laborers look like paupers by comparison. It’s one thing to argue for skimming the cream. It’s another thing to argue that the State can run a better dairy farm.

In any case, we can’t get to Denmark the way that the Berkeley radicals want to, or even the way that Bernie Sanders sells the vision. The road there for progressives is enticingly paved with more taxes for the rich and little else. They are loath to surrender any program or regulation, and seem as interested in controlling the private sector as in making it affordable to those in need. To make the US into a Denmark, we’d have to heed the decades of hard lessons learned by the Nordics, who have already passed through their socialist adolescence. We’d need compromise on both sides. We’d need to streamline government and make it more worthy of trust with our money. We’d need to retain respect for the autonomy of our citizens. We’d need to do it together and not thrust it upon the taxpayers by way of power politics, coercive activism, class warfare, and strategic deception. That way lies only resentment. As one commenter on this subject put it, “describing a satisfactory destination is not the same as describing the journey.”

For further reading:
https://www.bbc.com/ideas/videos/forget-hygge-the-laws-that-really-rule-in-scandina/p06gtkxt
https://www.cnn.com/2016/02/17/politics/bernie-sanders-2016-denmark-democratic-socialism/index.html
https://www.bloomberg.com/view/articles/2018-02-23/you-can-t-have-denmark-without-danes
https://www.dlacalle.com/en/face-it-nordic-countries-are-not-socialist/
http://punditokraterne.dk/2015/11/03/the-danish-model-dont-try-this-at-home/

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Posted on August 22, 2018, in Politics and tagged , , . Bookmark the permalink. Leave a comment.

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