NYT story just an excuse to bash welfare state

The Times article then proceeded to argue that the problem in Denmark is that, because so many people are on welfare, there are not enough people working to sustain the welfare state. While it’s true that the aim of many of the recent reforms is to get as many people as possible into the workforce, there is also broad agreement that Denmark does not face any crisis on account of the proportion of people who are not working.

According to Dean Baker, economist and the co-director of the Center for Economic and Policy Research, a think tank in Washington, D.C., Denmark actually has one of the highest employment-to-population ratios in the world, significantly higher than that of the United States.

However, we are told, comparisons to other countries “are misleading, since 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.”

But, according to Baker and other economists, the fact that Danes work shorter hours is simply a reflection of a choice they have made to take more of their compensation in leisure time than in wages. “There’s nothing scary about that,” Baker said. “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.”

Finally, the article implies that a new consensus has emerged in Denmark about the unsustainability of the welfare state. In fact, even the modest recent changes to the social assistance and student allowance systems have produced a significant backlash. The two main governing parties — the Social Democrats and the Socialist People’s Party — have seen a dramatic 20-point drop in the polls, while the two parties that have staked out positions against the cuts have seen a 10-point spike.

All of those facts put quite a dent in the Time’s big story. According to Kaj Pedersen of the Copenhagen Business School, the temptation to imagine the decline of the welfare state reflects a general discomfort with the idea that an economy can simultaneously be competitive and provide high levels of economic security and low levels of inequality. “It defies American logic,” he said.

Not only is this narrative mistaken, but by indulging in it, we are missing a huge opportunity to learn the lessons that Denmark might offer us.