'SOCIALIST' UTOPIA!15 Nov 2024 11:11
Denmark is an economic powerhouse with a GDP per capita higher than Germany, Netherlands and the UK. It is one of the richest countries in the world, but remarkably unlike Norway has no particular oil riches. Also, it has achieved its wealth despite having one of the highest tax rates in the world. What is the secret to Denmark’s success and how much can other countries learn from this country which also lays claim to have the 2nd highest levels of happiness in the world?
Denmark wasn’t always a high tax country. In 1965, taxes were just 29% of GDP, which was slightly higher than the US But, in the late 1960s, Denmark embraced a universal welfare state. Education, childcare, welfare benefits and healthcare are all provided free at the point of use. They are paid for by a consumption tax of 25%, income tax is upto 56%, leaving Denmark the highest tax burden in the OECD.
But, here is the remarkable thing, there is widespread acceptance of this high tax regime. According to a Gallup poll 88 per cent of Danes are happy to pay their taxes. Danish people simply see taxes as a good investment. Public services work, a Danish taxpayer can save thousands of Euros, that an American or British person may pay on university tuition fees, childcare, private health or high train fares.
Free market economists like to warn that high tax will destroy incentives to work, but this simply doesn’t happen in Denmark. Since the 1960s, when taxes rose, the Danish economy has continued to grow, outstriping many other advanced economies. It would be a mistake to say high taxes caused high GDP Denmark was doing well even before the extension of taxes. But, it is also a mistake to claim high taxes damage the economy. In fact Denmark is a good example of how a strong welfare state can strengthen the workings of the free market. Free childcare provision has enabled a growth in female participation. Free education has led to one of the best-educated workforces, vital in the service sector based economy. Leaving university without debt encourages young people to take risk. Benefits are generous, but unemployment is impressively low. This high spending has been achieved with impressively low levels of government debt, again one of best performers in Europe.
The support for high taxes also reflects the relatively strong sense of civic cohesion, which exists throughout Scandinavia, From the mid-nineteenth century, Denmark was able to cultivate a sense of progressive nationalism. Education which promoted a sense of moral responsibility and social cohesion. In an international measure of corruption. Denmark ranks number one as the least corrupt, reflecting a strong sense of trust in institutions, politics and the legal system.
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