If you were to ask me what my favorite country in the world is (besides the US of course, ILYSM) I would definitely pick Denmark. I have visited Denmark several times and I have some Danish friends, and I have got to say it is pretty cool in lots of ways. They are masters of alternative energy, particularly wind power (the world’s biggest wind turbine company, Vestas, is Danish). They have supertrains everywhere that completely put the “T” and Amtrak to shame. The entire country is bike friendly and there are bike lanes on pretty much every road (I would know – I’ve biked across the country). The Danes are a warm, socially tolerant, friendly, and beer-loving people. (Oh, and full disclosure, my uncle was the US Ambassador to the country in the 90s). But there’s another reason why Denmark is kickass: its economy.
John Cohn at TNR explains that America isn’t turning French, its turning Danish, and why this is good. (Video no longer available. Sorry! -ed.)
Cohn also wrote a terrific piece about Denmark in TNR two years ago. It’s not on the website anymore (TNR has sucky archives), but I found it.
If you believe the conservative rhetoric on economics, this combination of high taxes, a large public sector, and lavish welfare benefits ought to be killing the Danish economy. But it’s not. In fact, Denmark’s economy has thrived. And nowhere is that more apparent than in the job market. By the time Rasmussen left office in 2001, the unemployment rate had fallen from a 1994 peak of 9.6 percent to 4.3 percent; in 2002, it fell below the U.S. rate, where it has remained ever since. For the most recent quarter of 2006, Denmark’s standardized unemployment rate was 3.6 percent, compared with 4.7 percent in the United States. Moreover, while Europe has a reputation for fostering cadres of idle youth (a reputation that, in countries like France, has at least some basis in reality), in Denmark, a mere 3 percent of its 15- to 19-year-olds are neither in school nor working–the second-best rate in the developed world. (Tiny Luxembourg is first.) In the United States, by comparison, the figure is about 7 percent.
Bob Kuttner also wrote about Denmark’s pwnage in Foreign Affairs (subscriber wall, sorry).
Reading Adam Smith in Copenhagen — the center of the small, open, and highly successful Danish economy — is a kind of out-of-body experience. On the one hand, the Danes are passionate free traders. They score well in the ratings constructed by pro-market organizations. The World Economic Forum’s Global Competitiveness Index ranks Denmark third, just behind the United States and Switzerland. Denmark’s financial markets are clean and transparent, its barriers to imports minimal, its labor markets the most flexible in Europe, its multinational corporations dynamic and largely unmolested by industrial policies, and its unemployment rate of 2.8 percent the second lowest in the OECD (the Organization for Economic Cooperation and Development).
On the other hand, Denmark spends about 50 percent of its GDP on public outlays and has the world’s second-highest tax rate, after Sweden; strong trade unions; and one of the world’s most equal income distributions. For the half of GDP that they pay in taxes, the Danes get not just universal health insurance but also generous child-care and family-leave arrangements, unemployment compensation that typically covers around 95 percent of lost wages, free higher education, secure pensions in old age, and the world’s most creative system of worker retraining.
As these quotes make clear, the key to Denmark’s success is, the combination of dynamic, free market economies, and strong social safety nets. Of course, the US and Denmark are very different countries, so we can’t adopt these policies overnight. But Denmark’s example does point the way forward for liberals and America in the future.
This post originally appeared on Starboard Broadside.