Is Denmark Socialist? | 5 Minute Video — Transcript

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1. 0:01I am a citizen of Denmark, the Disneyland of socialism, where everybody is happy
2. 0:06and healthy.
3. 0:07Forget the Soviet Union, Cuba, Venezuela and all those power-mad Marxists who got it wrong.
4. 0:13Denmark is the model to follow.
5. 0:15There’s just one problem.
6. 0:17It’s a fantasy.
7. 0:18For it to be true, Denmark would have to be a socialist country.
8. 0:21But it’s not.
9. 0:22If it were, it would have gone “Venezuela” a long time ago.
10. 0:26Sorry to bring all the new fans of socialism the bad news.
11. 0:29But that’s the reality.
12. 0:31Yes, it’s true that Denmark has high taxes and a high level of government spending
13. 0:36—key features of a socialist mentality.
14. 0:38But in almost every other respect, Denmark is a full-on free market capitalist country.
15. 0:43And it has some of the strongest protections of individual property rights in the world.
16. 0:48And it’s a particularly easy place to open a business.
17. 0:52According to the World Bank, there is less bureaucratic red tape in Denmark than in any
18. 0:56other country, except for New Zealand and Singapore.
19. 0:59And the labor market is less regulated than in most countries.
20. 1:04Here’s something you probably didn’t know: there are no minimum wage laws in Denmark.
21. 1:08It’s not surprising then—or maybe it is surprising, given all the misinformation out
22. 1:13there—that Denmark ranks consistently as one of the top-ranked free market economies
23. 1:19in the world by The Fraser Institute in Canada and The Heritage Foundation.
24. 1:23So, if Denmark is not a socialist country, what is it?
25. 1:26The answer is pretty straightforward: it’s a small capitalist country (about the size
26. 1:31and population of Maryland) whose citizens pay oodles in taxes in exchange for oodles
27. 1:37in benefits.
28. 1:38Well, what’s wrong with that? you might ask.
29. 1:40Only this: for the government to pay out such benefits, you need citizens to make enough
30. 1:46money to pay the necessary taxes.
31. 1:48And that’s only possible through a free market economy.
32. 1:52Let me explain—with some Danish history.
33. 1:55Denmark, like its Scandinavian neighbors, Sweden and Norway, made a remarkable economic
34. 2:00recovery after the Second World War.
35. 2:02The combination of a highly productive work force and—get this—low taxes created a
36. 2:08lot of wealth.
37. 2:09So like every other wealthy welfare state, Denmark became wealthy before it created the
38. 2:14welfare state.
39. 2:16Relative to Europe, Denmark’s economic high-water mark was in the 1950s; relative to the US,
40. 2:23it was the early ‘70s.
41. 2:24It was then, in the late ’60s and early ’70s, that the country’s ruling elite
42. 2:30became preoccupied with wealth redistribution.
43. 2:34But the price paid for this social experiment was steep and swift.
44. 2:38The expansion of public spending led to a severe economic crisis.
45. 2:42The national debt skyrocketed.
46. 2:44It took decades of consolidation, structural reforms and curtailing of welfare schemes
47. 2:50to straighten out this mess.
48. 2:52This is the stuff you never hear about from the “Danish model” crowd.
49. 2:56The sharp tax hikes and spending also sparked a widespread popular revolt and led to the
50. 3:02emergence of the “tax protestors” party, Fremskridtspartiet.
51. 3:07Even though the party no longer exists, the widespread desire to cut taxes remains.
52. 3:12It’s worth noting that the welfare state originally began with government pension payments
53. 3:17to the elderly.
54. 3:18These social security-like payments are now in the process of being overtaken by private
55. 3:24pension savings plans—the Danish equivalent to a 401K.
56. 3:28That’s right—in reality, Denmark is gradually moving away from US-style social security.
57. 3:34It can’t afford it.
58. 3:36Denmark, the so-called socialist model, is returning the responsibility for retirement
59. 3:41savings back to its citizens.
60. 3:43And what about health care…free—right?
61. 3:46Nothing is free.
62. 3:47Danes pay for their health care through high taxes.
63. 3:51Private health insurance is available, however.
64. 3:53It’s becoming more and more popular as long wait times associated with government-run
65. 3:58medical care becomes less and less popular.
66. 4:02But in a welfare state, education is free—right?
67. 4:06Well, that’s another thing about “free”: it doesn’t mean ideal.
68. 4:09Almost one in five parents in Denmark chooses to send his or her children to private schools,
69. 4:17paying part of the bill themselves.
70. 4:19Yes, college is free, and even includes a living allowance, but there is a growing problem
71. 4:25of getting students to graduate.
72. 4:27Many wish to stay students and be supported by the state—one of those welfare-state
73. 4:32problems socialists don’t like to talk about.
74. 4:35And, again, all this “free stuff” comes with a price.
75. 4:39The average Dane pays 50% of his income in consumption and income taxes—that’s right,
76. 4:44I said 50%—while earning 15% less than the average American.
77. 4:50After taxes, an average American has a 27% higher disposable income than a Dane.
78. 4:57Don’t get me wrong—grey winters aside, Denmark has much to recommend it.
79. 5:02It’s just that being a socialist paradise isn’t one of them.
80. 5:05I’m Otto Brons-Petersen, economist for The Center of Political Studies
81. 5:09in Copenhagen, Denmark, for Prager University.