So, Denmark first became rich, and then introduced the government programs that make up the welfare state. The huge increase in government spending has been accompanied by deep structural problems, which has made it necessary to reform the Danish economy and welfare state. It can hardly be claimed that introducing the welfare state made Denmark rich; rather it was the other way around. Denmark first became rich, and then the authorities began to redistribute some of the wealth
It’s that”redistribution thing“. $tealing from you to give to someone who (the government thinks) deserves it more..
http://www.economicpolicyjournal.com/2018/08/the-truth-about-denmark-and-socialism.html
By Otto Brøns-Petersen
…The first thing to recognize is that Denmark, like the other Nordic countries, has quite a free-market economy, apart from its welfare state transfers and high government consumption. The Nordic countries tend to get rather high rankings on global measures of economic freedom. Denmark is thus number 22 on the Fraser Institute’s Economic Freedom of the World (EFW) index and number 11 on the index published by the Heritage Foundation.1 Denmark ranks at number 3 on the World Bank’s Doing Business report, which assesses the ease of doing business around the world.2
Second, Denmark did not become a rich country recently. As Figure 1 shows, Danish per capita GDP relative to other countries reached a maximum 40 to 60 years ago (ignoring the “noise” from the Great Depression and World War II). Denmark caught up to and overtook “old Europe” in the fifties, while it narrowed the gap with the United States and other Western offshoots until the early 1970s, when the process of catching up came to a halt. Danes are still not as rich as Americans…
The 1970s saw a strong tax revolt, as Mogens Glistrup’s newly formed Progress Party became the second largest in the 1973 “landslide” election. Nevertheless, spending kept growing as the welfare state attracted new clients and new programs were added, the economic crisis lead to increasing unemployment, and attempts were made to combat the crisis by increasing fiscal expenditures. By the early 1980s the economy was in very bad shape, with high unemployment, a huge and widening government deficit, and serious concerns over the large external deficit. All governments since the right-wing government, which came to power in 1982, have implemented structural reforms of the welfare state and tax system, reducing welfare state “generosity” and cutting marginal tax rates, as well as consolidating public finances.
So, Denmark first became rich, and then introduced the government programs that make up the welfare state. The huge increase in government spending has been accompanied by deep structural problems, which has made it necessary to reform the Danish economy and welfare state. It can hardly be claimed that introducing the welfare state made Denmark rich; rather it was the other way around. Denmark first became rich, and then the authorities began to redistribute some of the wealth…
Alas, Denmark is no longer the happiest country in the world, having been overtaken by the low-taxed Swiss in the latest survey.6 More important, as already mentioned, the Easterlin Paradox is not supported by the literature. The Danes’ high happiness level is probably due to their high income level. Furthermore, as pointed out by Christian Bjørnskov, a high level of trust also seems to increase life satisfaction, and, as Danes are quite trustful, that might play a role here too.7 Again, the high level of trust preceded the welfare state in Denmark rather than being caused by it.
In many respects, Denmark could serve as a model for the world. But if you fail to learn the right lessons, it could be dangerous to try to imitate our model, especially the idea that you can become rich by redistributing wealth or that there is a gentler, more successful way to socialism than the one experienced by typical socialist countries.
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