As an American who has lived in Denmark for almost 9 years, I observe that the connotation of “socialism” differs on both sides of the Atlantic. Many policies proposed by the American self-described “socialist” left would likely be rejected in Denmark and other EU nations as impractical, unworkable, or even illegal. Denmark, which many Americans believe is a “socialist” country, has more economic freedom than the USA. The Heritage Foundation ranks it 12th in the world; the US is 18th. This article briefly reviews public policy for technology, healthcare, immigration, law enforcement, and education in the US and EU.
Denmark conforms largely to the Nordic model of a democratic free market economy with a social safety net. Many Danes would describe themselves as “social liberals”, which in the US maps to “Libertarian Paternalism,” that public and private institutions can support good behavior while supporting individuals’ freedom of choice, a theory by mainstream American economists Richard Thaler and Cass Sunstein. Long ago Denmark implemented a variety of reforms that President Trump proposes today, and in the EU overall, his approach to immigration would be considered moderate when compared to the existing EU policies which already incorporate migrant camps and a wall.
The Danes’ reputation as the world’s happiest people is documented repeatedly by the United Nations World Happiness Report in the measure of income, healthy life expectancy, social support, freedom, trust and generosity. This is strengthened by a culture that is more than 1000 years old. Its people have shared values, history, language, and religion underpinned by a robust democracy characterized with political cooperation across multiple parties, a working social contract, and a transparent government ranked 1st or 2nd as the world’s least corrupt country for almost a decade.
Denmark is a utopia of sorts based on conscious political and economic trade-offs. High taxes on individuals to fund generous health and education programs are coupled with a robust, diversified market economy ranked first in the EU for its innovation friendly environment. Wages are kept high with a rational, merit-based immigration policy favoring highly skilled workers. A highly digitized economy is preferred over low-skilled labor. Danes perform many tasks themselves such as cleaning their own homes and maintaining their yards, rather than paying someone to do it for a low wage.
A key policy success is internet and telecommunications, making Denmark the world’s leading digital nation measured by Danes’ access, use, and skills in information technology. This policy was achieved through a 20-year multiparty political agreement on a laissez faire approach, inspired in part by the Democrat Chairman of the Federal Communications Commission (FCC) Bill Kennard. Today Denmark enjoys high adoption of fast, competitively priced broadband delivered through multiple, well-capitalized network facilities. Subsidies and municipal broadband are almost unknown in the country. The EU does not allow precious taxpayer money to be spent in areas where there is already private investment, and Danes prioritize public money for the poor, sick, and old, not for industries and technologies with viable business models. One of the first decisions of the new center-left government led by Social Democrat Helle Thorning-Schmidt, Denmark’s first female prime minister, was to dismantle the telecom regulator and reassign its people and functions to other agencies. The government wisely recognized that highly skilled government employees add more value to society by focusing on cybersecurity than micromanaging broadband prices. This brilliant stroke also eliminated the problem of regulatory capture, as the telecom regulator was perceived as favoring some companies over others.
Another success was Denmark’s industry led self-regulatory regime for net neutrality. For 5 years before EU law was imposed across the member states, Denmark enjoyed a high level of startup innovation and high investment in networks without violating consumer access to networks. During the same period, Netherlands which had the world’s strictest internet regulation, declined in locally made internet innovation. American Democrats espouse a policy designed to achieve government monopoly of the Internet with the instruments of utility regulation. A key success of the Trump Administration has been the restoration of the bipartisan policy which governed the internet from 1996-2015, the very policy promoted by FCC Chair Kennard, the policy the Danes adopted and optimized for their own success.
In any case, the government is an important actor in the Danish economy by leading in the implementation of information technology for the delivery of public services. Each person’s relationship with the entirety of government is organized with a single digital signature that facilitates the two-way payments of taxes and benefits, eliminating the need for tax returns. The same facility is used for firms. The EU recognizes Denmark’s leadership and notes how electronic invoicing saves Denmark’s taxpayers €150 million and businesses €50 million a year, something if introduced across the EU, would save €50 billion annually. Digitization is perhaps best illustrated by the disappearance of the paper post in Denmark. Our family of five receives one piece of paper mail per month, and there are but two standalone post offices in Denmark.
One area that is “socialist” by definition (government ownership or control of the means of production) in Denmark is healthcare. Unlike the US, whose system is illogically and inextricably linked to one’s employment and which has mutated through decades of perverse incentives, the Danish model is the outcome of a forthright discussion, consensus, and subsequent legislation that healthcare is part of the government’s social contract with the people.
What Americans consider health care is not exactly offered in Denmark. Many Americans see the healthcare as a backstop for lifestyles characterized by chronic disease, rather than a support for a person-centered system in which one takes primary responsibility for one’s health through proper diet, exercise, and balanced living. Obesity is less pronounced in Denmark because people eat more healthfully, integrate meals as part of daily social interaction, take bicycles, and so on. The Danish health care model is weighted toward preventative and catastrophic care, not the daily maintenance of preventable diseases. To control costs, prescription medicines are both limited and highly regulated.
The Danish healthcare system enjoys scale economies from centralization, low overhead, and lack of malpractice insurance and litigation, but the universe of health care products, services, testing, and screening is limited. Moreover, where physicians are not essential, other health care professionals perform procedures. Childbirth in Denmark, overseen by midwives, costs about one-fifth that of the US. Having no complications, I left the hospital a few hours after my son’s natural birth, and a midwife came to my home the next day. Private practice primary care physicians play a vital role as gatekeepers, regulating the degree to which people enter the government system by managing conditions so that they don’t get out hand.
Having studied health care policy and experience the health care systems of many countries, I believe that the US needs to replace its current government-centered approach by making the individual the driver with the help of information technology. The brilliant book The Patient Will See You Now: The Future of Medicine in Your Hands describes how this could work.
The United Nations reports that there are now an estimated 258 million people living in a country other than their country of birth — an increase of 49% since 2000. An additional 700 million would like to leave but can’t. This is a major concern for the U.N.’s 2030 Agenda for Sustainable Development goals. While we can all appreciate a migrant’s desire to improve his life as well as the humanitarian instinct to want to help those who suffer, it is also necessary to examine the complexion of international development policies to see what is broken and how they can be repaired. Despite of hundreds of billions of dollars of foreign aid, migration is growing; people are leaving their country seeking a better life elsewhere or have given up on making their country better. The EU reports a migratory crisis with just over one million migrants, a number that does not even scratch the surface of the total number of migrants. Some suggest that policy needs to be reoriented to address the millions left behind who are truly distressed, rather than accommodating those who reach the border as they have greater financial means. Moreover, the worsening situation fuels illicit trafficking in humans, weapons, and drugs.
A related issue is maintaining the integrity of legal immigration and transit. Millions of people follow the lawful process to visit or emigrate to other countries, whether presenting passports at ports of entry, completing official administrative processes, or visiting foreign consulates. If some are allowed to enter the country because they find a workaround outside of the official channels, it undermines and de-legitimizes the lawful processes.
Many EU leaders recognize the system for asylum, while well-meaning is no longer working and needs to be mended. A rational, fair and humane policy should help the most vulnerable first; identify and protect those in abject distress rather than favor those with financial means; prevent death and tragedy in migratory routes; break the business model of drug traffickers and smugglers; and ensure that integrity of borders and lawful immigration processes.
The EU has by no means solved the migration crisis. Indeed many are left to die on migratory routes and to drown in the Mediterranean Sea. The EU preference is to fund migrant camps outside the EU so that people are closer to their homeland. The EU’s comprehensive plan with Turkey included funding for camps as well as €2 billion, 500 mile wall between Turkey and Syria built in 5 months. It is fortified with movement-sensing machine guns to stop smugglers.
While Denmark accepts significantly fewer migrants per capita than other European countries, those which are accepted are well-treated and are offered a place to live with housing subsidies, welfare payments, access to healthcare, Danish language classes, counseling on social services, and guidance on how to integrate. Immigrants are expected to learn the language, participate in the national culture, and engage in Danish social institutions including daycare and schools. Denmark has made the tradeoffs transparent, tightening the restrictions to enter and stay in the country, (the Ministry of Foreigners and Immigration notes 98 austerity measures), while ensuring those who meet the requirements and are accepted receive generous support.
Trust and safety are a feature of Danish society. Women walk alone at night; babies are left outside in strollers while their parents eat in cafes; and children take public transportation to schools by themselves from early ages. Economic equality alone does not ensure law and order. There is also a high respect for law enforcement, and crimes are prosecuted. Moreover counter-terrorism is a national priority. Whereas the US has a travel ban for just 7 countries identified by the Obama administration (North Korea, Venezuela, Iran, Libya, Somalia, Syria and Yemen), Denmark has such a ban for some two dozen countries.
The notion of a sanctuary city is unheard of in Denmark. It is utterly unacceptable that a municipality would not cooperate with authorities to enforce the law. Nor would a Dane demonize public servants such as police officers, who also monitor the border and man ports of entry. All government employees are respected. Moreover, everyone is documented in Denmark, not only for safety reasons, but to deter tax fraud. The fundamental notion of fairness and equality in Danish society rejects free riders.
As a foreigner living in other countries including Japan, India, and Holland, I have always experienced that there were clear expectations for me as a non-citizen. Before earning the permission to work or study in another country, I had to document the value that I would add to the society, the skills I offered, that I had sufficient funds to cover my living costs, health insurance, and an independent means to arrive/depart the country for the approved period.
Denmark’s education system is closer to the free choice family-centered model proposed by Milton Friedman than Cubberly’s assembly line model of standardized education in which children are the “raw materials” for the factory of a school to be shaped into product workers for the economy. Friedman saw the US education funding model predicated on property taxes as fundamentally unfair and discriminatory, inherently disadvantaging children born in poor neighborhoods and perpetuating poverty. He advocated a system in which funding was aggregated at the national level and then distributed equally per capita via voucher to parents to use at the school of their choice. In Denmark parents have the free choice of whether to send their children to public or private schools, and government funding will follow the child, provided the school meets minimum requirements. Religious schools, including Christian, Jewish and Muslim, receive public money in Denmark. The number of students attending a private school has increased in the last decade, and is 30 percent of all students in some municipalities.
Denmark’s public policies are by no means perfect, but they offer an important counterpoint to the conventional wisdom about the validity of private versus public approaches to solving problems.
For further discussion, read 10 Things Bernie Sanders and Paul Krugman Should Know About Denmark and Tech Policy and the Midterm Elections.