Election time in US and all kinds of comparisons and debates are on.
One of the talks in Presidential debate is whether “the capitalist” US should become “the socialist” Denmark? Marian Tupy of Cato responds:
Perhaps unexpectedly, the beautiful northern European country of Denmark emerged as a topic of conversation during this week’s Democratic Party presidential debate. The small Scandinavian monarchy plays an important role in progressive mythology. It is a place many liberals want America to become, and both Bernie Sanders and Hillary Clinton sung its praises during the debate. A closer look at Denmark’s public policies is, therefore, warranted. It yields some surprising results.
What follows is a series of comparisons which shows both US and Denmark are at similar places despite different models. Denmark is a fab country but has its problems as well:
If this is what Sanders means by wanting America to resemble Denmark, he needs to be careful about the unintended consequences of a large increase in taxation and welfare spending.
As people grow more reliant on the state, they tend to see the arrival of newcomers as threatening. Immigration, for example, is thus increasingly seen as a zero-sum game. Not surprisingly, the Danes have grown more hostile to immigration as the number of immigrants to Denmark increased.
The Danish response to immigration is consistent with the research by Alberto Alesina of Harvard University, who pointed out the correlation between relatively high levels of taxation and redistribution, and homogeneity of the local population.
Denmark is a perfect example of a homogenous polity with a large welfare state. Of the 5.7 million people who live in Denmark, 88 percent are of Danish (Nordic) descent and 78 percent belong to the Danish Lutheran Church.
Creating a large welfare state, in other words, can heighten animosities between indigenous population and immigrants, or distinct religious and ethnic groups. Sanders ought to appreciate that the Danish level of taxation and redistribution would likely result in greater hostility toward immigrants and greater social strife in the United States as well.
In many ways, Denmark is a magnificent country, and the Danes rank among the happiest people on the planet. But Denmark is neither the socialist paradise Sanders makes it out to be, nor is its size of government a good role model for the United States.
Well, no country is perfect. But Denmark’s model does show socialism can work quite well if you have the right set of conditions. It has had a great record on most parameters that matter. What eventually matters is happiness of people and Danish model has exceeded all expectations on that front given the model it has followed..