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Is the Danish welfare state crumbling? Fierce debate erupts over story in The New York Times

Published: Wednesday, May 8 2013 2:13 p.m. MDT

A recent report in The New York Times suggests that Denmark is re-thinking its generous welfare state, facing increasing pressures to provide for an aging population.

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A recent report in The New York Times suggests that Denmark is re-thinking its generous welfare state, facing increasing pressures to provide for an aging population.

The debate over Danish welfare takes place against pressure throughout the developed world to reign in entitlements in the face of growing debt and aging populations.

Suzanne Dailey's report in The New York Times, which caused the stir, is incredulous in tone, notable in a newspaper not known for questioning big government largesse.

The Times noted that Denmark has "among the highest marginal income-tax rates in the world," which Danes offer in exchange for a "cradle-to-grave safety net that includes free health care, a free university education and hefty payouts to even the richest citizens.

"Parents in all income brackets," Dailey reported, "for instance, get quarterly checks from the government to help defray child care costs. The elderly get free maid service if they need it, even if they are wealthy."

The controversy in Denmark centered on a single welfare mom code named "Carina," who had been living on welfare from the age of 16 and was currently pulling in $2,700 a month in benefits.

A second furor centered on an able-bodied 45-year-old man named Robert Nielson, who had been on welfare for over 10 years, and, Dailey wrote, "had no intention of taking a demeaning job, like working at a fast-food restaurant."

“Luckily, I am born and live in Denmark, where the government is willing to support my life,” he said.

Dailey noted a series of reforms underway in Denmark, including raising the retirement age, shortening the duration of welfare benefits, and shortening the pension period for college students to get free money.

Remapping Debate's Mike Alberti pushed back aggressively at the Times report, calling it "an excuse to bash the welfare state," and arguing that key facts were distorted.

Alberti argued that Denmark is well-positioned to sustain its welfare state because it has very low debt levels and "an extremely robust private pension system."

“It would be easy to argue that Denmark is actually the country that is the best prepared for the coming demographic changes,” Lars Andersen, the director of the Economic Council of the Labour Movement, told Alberti.

Matthew Yglesias at Slate also jumped into the fray, arguing that Danes are employed at higher rates than Americans, even though they work significantly fewer hours.

"What is true is that the average employed Danish person works about 16 percent fewer hours than the average employed American person. Not coincidentally, GDP per capita in Denmark is about 16 percent lower than in the United States. The median Danish household consequently has less disposable income than the median American household, and in exchange it has more vacation and public services."

But questions linger. For while it seems obvious that the Danes do exchange higher leisure time for per lower capita GDP, it is less clear how the resulting lower productivity and disposable income can, as Yglesias argued, be "exchanged" for "more public services."

Figures that show high Danish workforce participation are misleading, Dailey argued, because “many Danes work short hours and enjoy perks like long vacations and lengthy paid maternity leaves, not to mention a de facto minimum wage approaching $20 an hour.”

In response, Alberti quoted Dean Baker, co-director of the Center for Economic and Policy Research in Washington, D.C., who argued that the Danes' shorter hours are simply a trade-off of wages for leisure.

“There’s nothing scary about that,” Baker told Alberti. “In the U.S. we have higher incomes and in Denmark they have longer vacations. That doesn’t have any bearing on the sustainability of the welfare state.”

Eric Schulzke writes on national politics for the Deseret News. He can be contacted at eschulzke@desnews.com.

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