Denmark starting to walk back some areas of their entitlement state
posted at 9:21 pm on April 22, 2013 by Erika Johnsen
Many of the wildly debt crisis-laden EU countries are currently railing against the oh-so-draconian, unacceptably harsh, and practically inhumane “austerity” budgets toward which their years of state-sponsored profligate living are now herding them, but up in Scandinavia, things are taking a slightly less dire turn. A couple of months back, Mary Katharine highlighted the steps that Sweden has been taking to contain their own major debt and entitlement problems, and Denmark has relatively quietly been doing some of the same without much political commotion.
Like Sweden and neighboring Norway, Denmark’s is a state of hearty subsidization and lavishly extensive entitlement benefits — including free university education, free health care, and other payouts to even the wealthiest citizens — of which the Danes are generally pretty proud, routinely touting theirs as one of the happiest and most compassionate societies in the world. Although they have much higher marginal income-tax rates than Americans (their top tax bracket of 56.5 percent kicks in at about $80,000/year), they worker fewer total hours and enjoy longer vacations and more perks.
Denmark still has their AAA bond rating, but the general economic downturn and the competitive slowdown has them taking look at what the future will bring if they don’t manage some of the unsustainably opulent generosities of their statist system. Sounds like a whole lot of baby steps to me, buy hey, it’s at least some kind of movement in the right direction, and it’s been happening sans the usual collective freakout from the many beneficiaries, via the NYT:
But Denmark’s long-term outlook is troubling. The population is aging, and in many regions of the country people without jobs now outnumber those with them.
Some of that is a result of a depressed economy. But many experts say a more basic problem is the proportion of Danes who are not participating in the work force at all — be they dawdling university students, young pensioners or welfare recipients like Carina who lean on hefty government support. …
But few experts here believe that Denmark can long afford the current perks. So Denmark is retooling itself, tinkering with corporate tax rates, considering new public sector investments and, for the long term, trying to wean more people — the young and the old — off government benefits. …
“The welfare state here has spiraled out of control,” Mr. Olsen said. “It has done a lot of good, but we have been unwilling to talk about the negative side. For a very long time it has been taboo to talk about the Carinas.”
Already the government has reduced various early-retirement plans. The unemployed used to be able to collect benefits for up to four years. Now it is two.
Officials have also begun to question the large number of people who are receiving lifetime disability checks. About 240,000 people — roughly 9 percent of the potential work force — have lifetime disability status; about 33,500 of them are under 40. The government has proposed ending that status for those under 40, unless they have a mental or physical condition that is so severe that it keeps them from working. …
I don’t know that I’d call it an “overhaul” or anything, but it is fairly encouraging that even a welfare state as advanced as Denmark’s can voluntarily concede that they’re headed in an impossible direction and need to take it down a notch, which in the long run will create a more competitive economy with much more robust prosperity than an otherwise floundering entitlement state ever could.