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Denmark: A Case Study in Social Democracy
Ludwig von Mises Institute ^ | July 22, 2003 | By Per Henrik Hansen

Posted on 07/22/2003 7:26:51 AM PDT by Mad Dawgg

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Denmark: A Case Study in Social Democracy

By Per Henrik Hansen

[Posted July 22, 2003]

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 formerly 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 overrepresented 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 longer!

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 off. 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 bottom.

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 are 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 first.

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.


Per Henrik Hansen teaches economics at the Copenhagen Business School. perhenrikhansen@hotmail.com To subscribe or unsubscribe to Mises.org's Daily Article, enter your name and email address and click on the appropriate button.

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TOPICS: Business/Economy; Constitution/Conservatism; Editorial; Government; Philosophy; Politics/Elections
KEYWORDS: mises; socialism
Interesting read, I always enjoy reading Mises articles!
1 posted on 07/22/2003 7:26:52 AM PDT by Mad Dawgg
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To: Mad Dawgg
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!

This country was founded on opportunity and not security. That is one reason we are so far ahead of these othere countries economically.

Unfortunately the socialists(democrats) want to turn that around.

2 posted on 07/22/2003 7:39:22 AM PDT by Capt. Tom (anything done in moderation shows a lack of interest -Capt. Tom circa 1948)
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To: Mad Dawgg
Very interesting. Thanks for posting.
3 posted on 07/22/2003 7:41:31 AM PDT by axel f
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To: Mad Dawgg
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.

Now you can understand why governments want government-run medicine, can't you?

My mother is a Dane and is up to speed on what's going on in Denmark, and it ain't pretty. The students in schools are as out of control as the ones here, and the 'free' health care is year by year cutting back on services, so you have to pay (again) for more and more services out of your own pocket. The Muslims who are pouring in are bringing with them people (and families back home) needing welfare, criminals, and the desire to establish Sharia law in Denmark.

She cries when she reads stuff like this. Her country is toast.

4 posted on 07/22/2003 7:43:50 AM PDT by Lizavetta
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To: Mad Dawgg; Straight Vermonter
Somebody should forward this to Bernie Sanders (S-Vt.) after his bizarre pro-Scandinavia, anti-America rant last week.
5 posted on 07/22/2003 7:50:01 AM PDT by wideawake (God bless our brave soldiers and their Commander in Chief)
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To: Lizavetta
Yes, government-run medicine is a form of selective population control and federal eugenics — Liberal Heaven.
6 posted on 07/22/2003 8:01:06 AM PDT by Consort
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To: oceanview
Ping for evidence that a large segment of a population can be largely dependent on welfare for their existence. I am starting to think you are on to something.
7 posted on 07/22/2003 8:04:48 AM PDT by riri
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To: Mad Dawgg
bump
8 posted on 07/22/2003 8:05:27 AM PDT by RippleFire
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To: Lizavetta
Everything you point out is also happening next door in Germany -- particularly the influx of Muslims who are demanding free welfare handouts. And the sons of all the so-called "pious," veiled Muslim women are the ones who are committing all the crimes. My purse was stolen right off my arm last year in Munich by a young Arab Muslim man who also had two of his buddies watching to make sure "the coast was clear." When I went to the police to report the crime, I was later given an appointment date to try to ID criminal photos -- more than 20,000 photos of young Muslim men who have committed local crimes are in the Munich police files.

I cannot stress enough how the influx of extremist Muslims into Europe is getting WORSE each month. It is so obvious wherever you go. At the rate it is going, the Europeans will be overpowered population-wise by the hordes of Muslims coming in. "Eurabia" will begin to kiss its freedoms goodbye over the next two decades if steps aren´t taken now to curb the illegal immigration here. And these Muslim men show absolutely NO respect for women of any age.

I cannot understand why countries like Denmark want to self-destruct!
9 posted on 07/22/2003 8:06:12 AM PDT by MissouriForBush
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To: Capt. Tom
You Are EXACTLY CORRECT!If all we wanted was"security"and"safety",this country would never have been founded!!The United States of America was founded on a bedrock of FREEDOM and OPPORTUNITY!!!The DemonRats don't like this and are incrementally trying to erode FREEDOM while increasing DEPENDENCY on an ever burgeoning GOVERNMENT!!!!!!!!
10 posted on 07/22/2003 8:21:42 AM PDT by bandleader
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To: MissouriForBush
I lived in a small town outside of Bremen. Population, maybe, 5000. If that. It was over-run by Muslims. They would take over entire apartment buildings. Trash everywhere,junk in the yards, bottles and crap in the windows. Just disgusting.
11 posted on 07/22/2003 8:26:01 AM PDT by riri
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To: Mad Dawgg
Ya, but Danes are second only to Americans on the happiness scale.
12 posted on 07/22/2003 8:28:11 AM PDT by Torie
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To: riri
They do the same thing over here in Europe, too. They expect others to clean up after them because they are too lazy to do so themselves.
13 posted on 07/22/2003 8:41:23 AM PDT by MissouriForBush
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To: bandleader
THANK YOU for stating perfectly why my ancestors fought in the American Revolution. The very values you succintly express were the ones handed down by my Revolutionary War ancestors from both sides of my family to the following generations.

God bless you for telling it like it is!
14 posted on 07/22/2003 8:48:29 AM PDT by MissouriForBush
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To: MissouriForBush
Please pardon my poor spelling. I meant "succinctly." (I think!)
15 posted on 07/22/2003 8:50:24 AM PDT by MissouriForBush
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To: MissouriForBush
My dad was a geologist in the oil exploration field. He spent a lot of time in the Middle East. He said the entire place, except Israel, is one big garbage pile.
16 posted on 07/22/2003 8:53:54 AM PDT by wjcsux
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To: Mad Dawgg
This guy is spreading too much common sense, truth, and sound analysis. Its time for a Leftist ad hominem attack.
17 posted on 07/22/2003 9:21:11 AM PDT by Plutarch
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To: Mad Dawgg
Amazing, so many liberal excuses put to the sword by a thorough and honest analysis. The compelling one was the one about college degrees. The state is willing to pay these people to get smart. The people don't want to give up four years of their lives because they can't get far enough ahead under a 70% taxation regime to justify the sacrifice. Amazing.
18 posted on 07/22/2003 9:58:04 AM PDT by .cnI redruM (Dirty Deeds and They're Done Dirt Cheap)
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To: wideawake
Somebody should forward this to Bernie Sanders (S-Vt.) after his bizarre pro-Scandinavia, anti-America rant last week. Done!

Meanwhile, Atlas Shrugged laughed his ass off.

19 posted on 07/22/2003 10:23:22 AM PDT by Straight Vermonter (Hey grandma, buy your own drugs!)
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Great article BUMP
20 posted on 07/22/2003 11:57:44 AM PDT by Constitutionalist Conservative (http://c-pol.com)
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To: MissouriForBush
Dear MissouriForBush,ThankYou for your acknowledgement!I too have ancestors that fought for our FREEDOM(not comfort)in what The Brits refer to as;"The War of The Rebellion"!!They didn't fight for"cradle to grave"government WELFARE,they fought for INDIVIDUAL FREEDOM!!!!!!!!!!!!
21 posted on 07/22/2003 9:44:28 PM PDT by bandleader
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To: Capt. Tom
Ultimately, socialism fails everywhere it is tried because it fails to recognize one thing: its basic premise destroys incentive. It punishes the productive and rewards the indolent. In so doing it merely creates more indolent.
22 posted on 07/23/2003 12:55:15 PM PDT by 45Auto (Big holes are (almost) always better.)
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To: Mad Dawgg
The end result of the coming collapse of Socialist Europe will be another World War.
23 posted on 07/23/2003 12:57:21 PM PDT by 45Auto (Big holes are (almost) always better.)
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To: 45Auto
Indeed. The only real question IMO is whether a European tyrant will rise and slaughter the immigrants, or whether a Muslim tyrant will rise and slaughter the remaining Europeans.
24 posted on 07/23/2003 1:06:56 PM PDT by Tauzero (This was not the sand-people, this was the work of Imperial Storm Troopers: only they are so precise)
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To: Tauzero
The end result of the coming collapse of Socialist Europe will be another World War.

Indeed. The only real question IMO is whether a European tyrant will rise and slaughter the immigrants, or whether a Muslim tyrant will rise and slaughter the remaining Europeans.

It will be the former. Unjustified arrogance and slovinliness are some of the hallmarks of cowardice. Whatever else you may think of the current state of Europe, history amply demonstrates that they are not cowards (except the french) and once they remember that, the invading muslims will be toast.

25 posted on 07/23/2003 1:47:58 PM PDT by lafroste
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To: lafroste
"Unjustified arrogance and slovinliness are some of the hallmarks of cowardice."

I think rather they are marks of barbarism. And while barbarians may have individual courage in plenty, they are sorely lacking in fire discipline and sound tactics. That might be the difference.

26 posted on 07/23/2003 2:03:54 PM PDT by Tauzero (This was not the sand-people, this was the work of Imperial Storm Troopers: only they are so precise)
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To: 45Auto
"The end result of the coming collapse of Socialist Europe will be another World War."

Fabulous. Perhaps we should sit this one out.

27 posted on 07/23/2003 2:17:19 PM PDT by AngryJawa
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To: Tauzero
There is one point not mentioned in this article. Excessive, burdensome taxation gives rise to those who will find ingenious ways to make money "outside the system". When people are paid by government not to work and have a lot of "free time", the natural inclination is either to drink and smoke dope all day, or find another way to supplement their income. We see this in spades (no pun intended) in places like Oakland, California, where the unemployment rate for young black males runs about 40% for a variety of reasons, one of which is the city is a microcosm of the welfare state in action. The "underground, cash-only" economy revolves around drug sales. And, naturally, the crime rate, especially gang-related murder, is astronomical.
28 posted on 07/23/2003 2:48:37 PM PDT by 45Auto (Big holes are (almost) always better.)
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To: lafroste
That's exactly right. The European 'far right' (read: patriots) grow in numbers in the same proportion of the numbers of the Mohammedans. When the smoke clears, we'll take our countries back and the Mohammedans will be returning to theirs.
29 posted on 07/24/2003 7:51:51 PM PDT by Captain Kennit
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To: Captain Kennit
BUMP! Related Post from Per Henrik Hansen

Denmark: Potemkin Village

30 posted on 09/02/2003 10:40:55 AM PDT by Mr.Atos
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