Economy

Check Out the Successful Danish Model


Danish fashion (not economic) model Freja Beha, in GucciPhotograph by Venturelli/WireImageDanish fashion (not economic) model Freja Beha, in GucciNo, people, not that kind of successful Danish model. I’m talking about the economic model that has given Denmark lower unemployment than the U.S., less inequality, more social mobility, lower budget deficits, more opportunities for women, a bigger share of working people, and a happier population.

Today Nick Haekkerup, Denmark’s minister for trade and European affairs, spoke at the New School for Public Engagement about why, in his view, Denmark can thrive with a combination of high taxes, generous social services, and an efficient public sector.

It was a receptive audience: The New School, founded in 1919 in New York’s Greenwich Village, is a hotbed of New York liberalism. On the walls of the room where Haekkerup spoke were frescoes by Jose Clemente Orozco depicting such world-historical figures as Mahatma Gandhi and Vladimir Lenin.

Haekkerup took exception to a New York Times story published last May headlined online “Danes Rethink a Welfare State Ample to a Fault.” He said: “True, we are reforming. But the real story is quite different.”

He said Denmark’s “flexicurity” employment policies encourage employers to hire workers by ensuring that they won’t be penalized if they have to lay them off later. The cost of benefits like health care is borne by the government. And Danes receive training that enhances their employability.

“I believe that the American dream comes alive in Denmark,” Haekkerup said.

That’s not to say everything’s copacetic in Copenhagen. Haekkerup said “there may be some truth” to the argument that Denmark isn’t as good at innovation as the U.S. is, but he said government procurement policies aim to promote new approaches to problem-solving.

He also acknowledged that Denmark doesn’t have to shoulder American-scale military spending. In a previous stint as defense minister, he says, he met with U.S. Defense Secretary Leon Panetta and discovered that Denmark’s entire defense budget equaled what the Pentagon spends on air conditioning.

In the question-and-answer session, I asked about Denmark’s problems incorporating poor, unskilled immigrants. He said “this has been an extreme struggle within my own party,” the Social Democrats. The party’s current policy, he said, is to limit—though not cut off—immigration to protect the welfare state.

Coy_190
Coy is Bloomberg Businessweek's economics editor. His Twitter handle is @petercoy.

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