Denmark: A Case Study in Social Democracy (fwd)

Denmark: A Case Study in Social Democracy
by Per Henrik Hansen

In a previous article?"Denmark: Potemkin Village
"?I documented the
downside to Denmark. Despite its reputation as a showcase of political
utopia, 40 percent of its adult population live on government transfer
income, full-time, all-year. A little more than a third of these people are
pensioners and the rest are working age. About one third of the people who
actually hold a job work for the government or government-owned companies.
The effective tax level is around 70 percent, not the 50 percent that is
usually reported (the lower figure comes about by disregarding the effects
of the sales tax and excise taxes).

My article led to many questions and comments from readers. One reader
admitted that the Danish welfare state is very expensive but claimed that it
is worth the price. If high taxes buy a society where people feel secure,
where crime levels are low, and where people are well educated and live long
and healthy lives, maybe the high taxes aren't such a terrible thing!

For now, let's ignore the ethical question associated with all coercive
redistribution. Instead, let's look at the extent to which safety, security,
and quality of life really do characterize Denmark.

People can feel socially secure in Denmark - at least for now. People don't
get rich from welfare but they can live a comfortable life. Practically all
people are eligible for one program or another. But the system is
unsustainable in the longer run. In the early 1970s only about 300,000
people of working age lived full-time all year on government welfare. Today
it is about 900,000. The population size has remained unchanged at around 5
million. In the not too distant future, more people are going to be
pensioners and fewer people will be working age. At some point, the trough
will be empty.

The welfare state has also nationalized many of the former family support
functions. In 1960, 91 percent of all women 30 years of age were married.
Today, fewer than 50 percent are. Partly this is because people are marrying
later in life, and yet a considerable part of the explanation is that many
people do not marry at all.

Of the people who do get married, more people get a divorce today. In 1975,
18 per cent of all the marriages from 1950 had ended in a divorce during the
preceding 25 years. In 1995, 36 per cent of the marriages from 1970 had
ended in a divorce. Of marriages in 1985, 20 per cent ended in a divorce
after only 7 years. As a result of the above, many more people live in
single households today than did in 1960. In 2000, one third of all adults
in Denmark were living alone.

If we next look at the crime level, the Danish Statistical Yearbook 2002
shows reported crimes from 1935 to 1960 to be stable: about 100,000 crimes
per year. But from 1960 until today, the number of crime reports has
increased by 500 percent, to more than 500,000 per year. And if we look at
violent crime, the picture is even grimmer. The number of violent crimes in
1960 was approximately 2,000; it is approximately 15,000 today. This is an
increase of more than 700 percent, and it is still rising steeply.

This is a very surprising development. Welfare state advocates often say
that crime is caused by poverty. Well, Denmark has become about twice as
rich per citizen during this period of rising crime. Another argument is
that poverty is caused by economic inequality. Well, Denmark has engaged in
the most comprehensive income redistribution program of any nation. Denmark
is the most egalitarian country in the world today.

So, a rising crime level is the last thing the welfare statists might have
predicted using their own theory. Maybe there is some other independent
factor causing the development? Denmark has taken in a great number of
immigrants and refugees from third-world countries. These immigrants
unfortunately are greatly over-represented in the crime statistics -
something like 5 to 1 - but they only account for less than 10 percent of
the population, and hence cannot account for the entire increase in crime.

There are better explanations. Massive redistribution schemes have undercut
people's respect for property rights. The rhetoric against wealth-producers
that has accompanied the redistribution has created social antagonisms.
People on government transfer income have a lot of extra time on their
hands, and their hands do the "devil's work."

The best explanation may be the change in the views of intellectuals. In the
1960s, the theory emerged that crime should not be blamed on the offender
but on society. This led to the conclusion that crime should not be punished
- at least not very harshly - but instead socially treated.

This idea is still so widespread that the present Minister of Justice, who
is a conservative, proposed that prisoners be released when they have served
only half their sentence. This, she said, would solve the problem of long
waiting lists for the Danish prisons. But it might also make the lists even

Let's now look at education. Many people believe that if education were not
provided by the government, only rich people could afford it. Let us compare
Denmark to the U.S., where public funding of especially higher education is
not nearly as readily available as it is in Denmark. According to the report
"Education at a Glance" from the OECD, 15 percent of people between the ages
of 25 and 64 has a bachelor degree or more in Denmark. In the U.S.A., it is
26 percent - nearly twice as many. In Sweden, the number is 13 percent, and
Norway 16 percent.

If we look at the other end of the education level, those with only 9 years
of education, in Denmark it is 34 percent, whereas in the U.S. it is 14
percent. In Sweden the number is 26 percent and in Norway 18 percent. Again
the numbers are much more favorable in the U.S.

The U.S. has, according to this report, the best educated population in the
world measured by numbers of years of schooling. No country has as many
highly educated people as the USA and no country has as few people with only
9 years of education. This is information, I know, is surprising to most
Europeans (conceding of course that this is a quantitative and not a
qualitative measure).

In Denmark, many people are prevented from gaining the education they would
like. All higher education is publicly run and free. Central planners decide
how many doctors, architects, engineers, lawyers, economists, etc., that
society needs. Students are rationed according to their grades in high
school. If your grades are not high enough, you may not begin a degree
program of your preference.

There are no objective tests of the quality levels in Denmark that I know
of. However, one indication of the falling quality level in education could
be the considerable shift in applicants for higher education away from the
sciences and into the humanities. Everything involving mathematics, or other
clearly demonstrable skills such as natural science or economics, is
disliked by the applicants.

What about health? Denmark is one of the few OECD countries where the
average life span has hardly increased since the early 1970s. In the early
1970s, Denmark was at the top in OECD comparisons; today it is closer to the

According to the politicians, this has nothing to do with poor quality at
the Danish hospitals or long waiting lists for examination and surgery. They
say it is due to the Danish people's habit of smoking and drinking. And yet,
often one can read in the news stories of people who die preventable deaths
simply because they were on a waiting list and unable to get care.

Sound economic theory can explain the shortages and continuously falling
quality in government-provided health care and education. When suppliers are
not driven by the profit motive, nor subjected to market competition, they
cease being customer oriented. Quality declines and costs rise. Due to the
lack of market prices, and therefore no economic calculation, they can
neither plan efficiently nor satisfy consumer demand. They do not have the
information or the incentives to make rational decisions. This was the case
in the formerly centrally planned economies. It is also the case in Denmark,
where central planning also prevails in parts of the economy, most
significantly in health care and education.

In conclusion, we can say that neither on crime, education nor health do we
see the favorable results we would have expected. Quite to the contrary. The
prospects for being able to rely on government or family for social security
are also rapidly diminishing. These are not very bright prospects indeed for
a country where each working citizen is forced to sacrifice such a large
share of his personal earnings to the common good.

One option for young people is to leave. It was recently proposed by one of
the three economists from the Danish Economic Council that if young people
in Denmark wish to move abroad after they have completed their education,
they should first have to pay back the costs of their education. Only when
they have paid enough taxes to cover all the expenses of their education,
would they be able to move abroad without having to pay the government

Thus do we have proposed the social-democratic version of the Berlin Wall,
an economic barrier to prevent emigration so that the state can continue to
tax people to sustain a system that is unraveling. The mere suggestion is a
telling sign that Denmark has nearly reached the end of the road.



- "Liberals, it has been said, are generous with other peoples' money,
except when it comes to questions of national survival when they prefer to
be generous with other people's freedom and security." --William F. Buckley

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