The Nobel Laureate and New York Times columnist has decided that after the Democratic debate and the exchange about Denmark between Sanders and Clinton, perhaps it would be useful if we understood a bit more, so he offers this column. After setting up his context, he informs us
that the Danes get a lot of things right, and in so doing refute just about everything U.S. conservatives say about economics. And we can also learn a lot from the things Denmark has gotten wrong.
And it will probably not surprise you to find out that the only thing Republicans seem to want to learn from the Danes is what they got wrong.You can just follow the link to the column if you want – my feelings will not be hurt, or you can continue to read as I explore further and offer a few additional comments.
Krugman is absolutely forthright in saying that Denmark provides a welfare state
that is beyond the wildest dreams of American liberals.
– universal health care
– free college education plus a stipend for students (something I note is available in this country mainly to D-I scholarship athletes)
– heavily subsidized day care (our tax credits and flexible spending are not as generous)
Overall, working-age families receive more than three times as much aid, as a share of G.D.P., as their U.S. counterparts.To pay for these programs, Denmark collects a lot of taxes. The top income tax rate is 60.3 percent; there’s also a 25 percent national sales tax. Overall, Denmark’s tax take is almost half of national income, compared with 25 percent in the United States.
Yes, you can hear conservative heads (including some Democrats) exploding.Except Denmark is not a nation or an economy that is collapsing.
In fact, a higher percentage of working aged Danes are employed than is the case in the US, and while per capita GDP is lower, it like the percentage of employed Danes, is in large part due to the greater amount of vacation taken by the average Dane as compared to the average American.
And as Krugman writes, using an elliptical Shakespearean reference,
Nor are the Danes melancholy: Denmark ranks at or near the top on international comparisons of “life satisfaction.”
He reinforces the idea that taxes and benefits are not the job-killers Republicans argue by also offering the example of France.But remember, he did say we could learn from what Denmark got wrong. Denmark has seen a 5.5% decline in real GDP per capita since 2007, which puts it in the company of troubled economies like Portugal or Spain, although Danes remain far better off.
Why the decline? Because even though Denmark is NOT in the Eurozone, it has chosen manage its monetary supply as if it were, and thus followed what Krugman considers the very bad policies of those countries in the Euro (as demanded by the Zone’s major player, Angela Merkel’s Germany). Yet the country has a long-term interest rate of 0.84%, and thus faces NO fiscal pressure requiring the austerity approach it has chosen.
Krugman compares the results in Denmark with those of its neighbor Sweden, also a social welfare state that is not in the Eurozone. Sweden has not followed the pattern of austerity and it has seen its real GDP per capita grow.
As to those who denounce the kind of welfare state seen in Scandinavian nations (although our social welfare programs have never approached that level of generosity) Krugman reminds us that
people who denounce things like universal health coverage and subsidized child care tend also to be people who demand higher interest rates and spending cuts in a depressed economy. (Remember all the talk about “debasing” the dollar?) That is, U.S. conservatives actually approve of some Danish policies — but only the ones that have proved to be badly misguided.
I will leave it to you to read the one paragraph in the column that follows the words just quoted.Let me offer a few more remarks about Denmark. It is now EXPORTING clean energy. What if we were simply self-sufficient in energy through clean energy. Think of the money we would save from the transfers to other nations (including Canada and Venezuela, the latter owning Citgo), the interest on the debt we incur to finance those energy purchases, and the savings in so many areas from the reduction of the carbon we place into the environment – the cost of polluted land, water, and air; the increasing global warming; the cost of exploding trains; and were we to remove some of the profits from energy intensive corporations the distortion of our political and economic systems.
For those who say the US has nothing to learn from other countries, I will believe it when you give up everything we have gotten from other countries, which include things from diesel engines (named after German Rudolph Diesel) to so many of the foods we eat. Our refusal to consider the possibility that some countries may do things better than we do is part of the reason I do not accept American Exceptionalism as it is normally propounded.
Anyhow, make of this diary what you will, but by all means read and pass on the Krugman column.