Coronavirus DK: Not so fast – it’s not over yet

After being closed for about two months, shopping centers are preparing to open (DK) tomorrow. They are setting up signs explaining the rules of conduct and bottles of hand sanitizer. They are closing lounges and children’s playrooms. Security guards and customer counters will be posted at the doors to make sure that customers maintain a distance from one another. Vibeke Qvist, the head of the Frederiksberg Center Association in Copenhagen, does not expect a large number of customers at first, but she and the shop owners are happy to get started again. 

The government does not want people to think that the lockdown is over and to let things get out of control, however. Along with the resumption of some activities in phase 2, it is also issuing a formal prohibition against activities (DK) that have not yet been approved for reopening. The ban will be enforced by the police, and violations will be subject to penalties, says Minister of Justice Nick Hækkerup. Certain zoos and museums have raised the possibility of opening before they are scheduled to in phase 3 on June 8. Thus far, there has been no official prohibition, and that has led to some confusion at times, for example when a cabinet minister informally disapproved of IKEA’s reopening although it was perfectly legal. Hækkerup sympathizes with organizations that must wait longer to open, but explains that prioritization is necessary in order to maintain control of the spread of the infections.

No jumping the gun

To remind people of the timetable, the police are tweeting about enforcing violations. Yesterday evening in Jutland, two restaurants were charged (DK) with serving food and drinks at outdoor tables. Restaurants and cafes are not scheduled to reopen until May 18. In another Jutland town, 14 people were caught congregating (DK) in a parking lot. Four got away, but ten were charged with exceeding the limit on gatherings.

The Ministry of Foreign Affairs extended its advisory against unnecessary foreign travel (DK) until May 31. Jeppe Kofod, the Minister of Foreign Affairs, says that he understands people want to travel and are worried about their summer vacation plans but that conditions under the pandemic do not permit free travel yet. Airlines’ business has suffered greatly during the crisis. In April, the number of passengers on SAS flights fell 95 percent from the level in 2019.

Infections falling despite reopening

SSI, the agency responsible for preparedness against infectious diseases, reported a decline in the reproduction rate (DK), or R0, which measures the average number of people infected by an infected person, despite the first relaxations of the lockdown restrictions. The announcement, which was made in an email response to the Ritzau agency, did not specify the latest measurement. The rate had fallen to 0.6 in mid-April and then, after the first phase of the reopening, had risen back to 0.9 on April 30. The rate is used in the government’s decisions about the relaxation of pandemic restrictions. The SSI cautioned that it is subject to a margin of error and that a new measurement would be made in the coming week.

The wonders of socialism

Readers have referred me to a Friday NY Times column by Nicholas Kristof, “McDonald’s Workers in Denmark Pity Us.” Kristof gives a good overview of the advantages of Denmark’s social democracy, which is derided by some American politicians as “socialism” even while conditions in the US labor market during the pandemic deteriorate at an alarming  pace.

Has Denmark been knocked out of the Democratic debates?

With Joe Biden’s primary win in Michigan and most of the other Super Tuesday II states, I thought it might be time to retire Denmark from the presidential election debates. Sanders has continued to compare his “democratic socialism” to the Danish and other Scandinavian social democracies, but voters in the more populous states after the Nevada caucuses, with some nudging by the Democratic National Committee, have mostly said No thanks. It is unclear whether they did so because they reject Sanders’s platform, they don’t believe it’s feasible, or any number of other reasons – they find Sanders ideologically rigid or less electable than Biden. Sanders still has a substantial following and could draw out the primary contest, but it looks like his socialist revolution will have to wait until a future election cycle.

So it is curious that also on Super Tuesday II, Thomas Friedman wrote in the New York Times that it is Biden who “is the true Scandinavian.” Sanders, with his hostility toward free markets and other features of a liberal democracy, writes Friedman, “probably couldn’t get elected to a municipal council in Denmark today.” That’s an exaggeration. He could be elected to Copenhagen’s city council, which is notoriously “red.” In 2017, the far-left Red-Green Alliance won 18% of the vote, more than any other party except the center-left Social Democrats, enough to enable them to pursue their vendetta against automobiles, for example. But Copenhagen is an exception, and Friedman’s point generally holds: Sanders would belong to a fringe movement in Denmark. The country wouldn’t vote for nationalizing the transport and the energy industries. Of course, many of Sanders’s signature proposals already exist in Denmark, so the comparison isn’t clear-cut.

(If some think I should therefore disown the subtitle of this blog, with its reference to a “socialist monarchy,” my excuse is that it was a provocative exaggeration intended to draw a stark contrast. I do confess, however, to being mistaken in an early post in 2016, when I assumed too easily that Sanders was really a social democrat and not a dogmatic socialist.)

Utopia or the best of both worlds?
But what, according to Friedman’s thinking, is the stealth Scandinavian program that Biden may not even know he is a proponent of? Friedman gives a good summary of the welfare state services and benefits that Sanders admires, the heavy taxes that they require, and other features crucial to Denmark’s prosperity that Sanders ignores or overlooks. The most important of the latter is a free market economy that is open to entrepreneurship and globalization. There is little of Sanders’s demonization of corporations and billionaires. Proponents of a planned economy of the type Sanders’s favors are a small minority that has been held in check in recent years by alternating center-left and center-right administrations.

The second aspect that Friedman highlights is the “high-trust social compact among [Denmark’s] business community, labor unions, social entrepreneurs and government.” His point is that such cooperation is impossible if you accept Sanders’s premise that capitalism is essentially evil and its success stories are owing to greed and corruption. The wages of around two-thirds of the Danish labor force are governed by agreements between employers’ associations and labor unions. Friedman recalls a meeting of the Danish “Disruption Council” that he attended. He watched “corporate leaders, national union leaders, educators, social entrepreneurs and cabinet ministers” brainstorming respectfully and understanding the need to compromise for the sake of greater good.

Viking Joe the mediator
It is less clear how Biden fits into the Scandinavian model. He obviously has a much more modest approach to reform than Sanders and would pursue an expansion of the social safety net incrementally. He has a broader ideological and demographic appeal, to no small degree because he is more pragmatic and less ideological than Sanders. Any prospect of reducing wealth inequality and poverty or job and healthcare insecurity depends on reducing the polarization and gridlock in Congress, and Biden, as a moderate with a more collegial history and relations with Senate Republicans, is eminently better qualified than Sanders to forge a basis for cooperation – assuming that Republican congresspeople would return at least partially to their senses after the departure of the evil wizard who has bewitched them. 

Biden’s critics on the left will point out that you can’t be a senator from Delaware for many years without being a good friend to corporations, a very good friend, as they might put it (the same people who would say that Friedman is a good friend to neoliberalism). One curious feature of Danish parliamentary politics is that on a few occasions in recent years, the left-wing administration has enacted conservative measures that the preceding right-wing administration did not even attempt, and vice versa. If the parties had held strictly to their ideological profiles, they would have encountered resistance from the other side. Although there has been a gradual drift toward the right that dismays a significant segment of the electorate, there is much to be said for the increased efficacy of policies based on consensus-seeking. Biden has a better chance of achieving that than any of the other candidates.

Don’t vote socialist yet, Democrats

Denmark is back in the Democratic primary debates. When Amy Klobuchar listed various people that Trump blames instead of himself, she included “the king of Denmark.” Denmark hasn’t had a king for more than 60 years, and Trump didn’t blame the queen either. After Prime Minister Mette Frederiksen called his proposal to buy Greenland “absurd,” he described her remark as being “nasty.” At his request, Queen Margrethe had invited him to visit Denmark, and after Frederiksen’s response, he canceled the visit. If he had come, he would certainly have found something to blame her for – perhaps for not banning the Trump Baby Balloon – but in this case, Klobuchar’s charge was inaccurate.

As model egalitarian societies, Denmark and the other Scandinavian countries remain in the background of the Democratic campaign, though, as they were when democratic socialist Bernie Sanders praised them in the 2016 campaign. Sanders and Elizabeth Warren presumably know more about Denmark’s welfare state than Klobuchar does about its royalty, and their proposals of radical reforms to reduce social and economic inequities have found an eager audience among a segment of Democratic voters. About half the Millennials polled favor socialism over capitalism. If other countries can provide universal health care, tuition-free university and subsidized daycare, why can’t the supposedly greatest country in the history of the world?

The risks of failure
I can generally recommend Western European social democracy, although it is not quite the socialism that many American Progressives suppose and it is not clear that its socialist tendencies are responsible for its relative prosperity and social harmony. I don’t think this is the moment to bet on a major fiscal restructuring in the US, however. The country is in a political and cultural crisis with a rogue administration dividing the population into factions that can’t understand and communicate with each other. The domestic polarization is worse than it has been in 50 years, and in foreign relations, the administration has destabilized the world by alienating democratic allies and encouraging authoritarian regimes. The stakes have rarely been higher, and the Democrats’ priority should be to end the misrule. A platform of drastic reforms would greatly increase the chances risk that Trump will be re-elected. 

Trump’s base is apparently impervious to dishonesty, disinformation, corruption and consummate boorishness. And a sitting president with a fairly sound economy and no primary challenger in his own party has a huge advantage in the general election. If the Democratic Party is pulled toward the Progressive fringe, it will lose the centrists of both parties and the independents that it needs to win. Demands for open borders, health care for undocumented immigrants, late-term abortions and gender self-identification would alienate moderates. The country cannot afford the risks of another four years of Trumpism. It might be unrecognizable afterward, assuming that the Orange Oaf could be pried out of the office even then.

The risks of succeeding
Even if a Progressive Democratic candidate wins the general election, the implementation of structural reforms to mitigate wealth inequality, economic insecurity and Wall Street abuses is far from certain of becoming a reality. They would be very expensive and require enormous deficit spending, and the partial financing from a wealth tax, a higher capital gains tax, a financial transactions tax and more would most likely crash the stock market and cause a recession, probably another serious one. The market, which has been propped up by the Federal Reserve’s low interest rates and spigot of repo loans to the largest banks is long overdue for a correction, which would be blamed on “democratic socialism” or fears of the same. It would be used to discredit reforms and make it even harder to implement them.

There is a better chance of improving social welfare by first aiming to recapture the White House and restore a traditional liberal democracy before trying to overhaul the healthcare sector and the financial markets. If that succeeds, then it won’t be many terms before AOC and her cohort will get their shot at fashioning post-capitalist, post-racial, post-gender republic.

Why there is less social justice warfare in Denmark

Why doesn’t Denmark have as much controversy about social justice issues as do the US and the UK?

First, racial and ethnic tensions are not as acute because Denmark does not have the same history of slavery and colonialism. Slave trade was conducted in the Danish West Indies until 1848, but there is no segment of the Danish population that has descended from slaves and endured centuries of discrimination. There is an ethnic underclass, but only around 13 percent of the population has a foreign background. The largest group are the descendants of “guest workers” who came mainly from Turkey in the 1960s and 1970s. It is difficult to remember a case of the police killing a person of color person under suspicious circumstances.

Second, conditions for women are more favorable because of the extensive welfare state and a tradition of greater egalitarianism.

Third, the country has historically been one of the most tolerant towards LGBT+ groups. It was the first to recognize same-sex partnerships, and it legalized same-sex marriage in 2012. 

Fewer enemies
Fourth, the right-wing radicalism that provokes activism on the Left is less extensive and prominent. White supremacist and neo-Nazi groups are very small and are looked down upon by the general population. The extremist Stram Kurs (Hard Line) Party, which advocated deporting all Muslims, received 1.8 percent of the votes in the 2019 election and didn’t qualify for seats in Parliament.

Fifth, universities, where most social justice agitation and scandals have taken place in the US, have an infrastructure in Denmark that makes them less susceptible to activism. They are not residential colleges. There are some dormitories, but very few are located on campus. Many students commute from home or live in apartments. They do not congregate as often as American students in clubs and interest organizations and perhaps for that reason do not develop a tribal mentality. They are also more professionally oriented. They do not simply “go to college” to get a B.A. They choose their major fields when they apply and begin to specialize after one year. It is likely that more of them are more interested in pursuing their careers than in political activism. Additionally, they aren’t burdened by the prospect of a sizeable undischargeable debt upon graduation. 

Sixth, Twitter, which offers the quickest and easiest way to engage in ideological warfare, is less widespread in Denmark than in the US. Facebook is the most popular social media forum here. It does sometimes attract heated debate but has less rapid-fire escalation of denunciation and insult-trading and, in the extreme, mob frenzy. 

Marxism was here first
Seventh, the European socialist tradition already offered a theoretical framework and vocabulary for addressing social injustice. It was more firmly established and intellectually coherent than, say, Occupy Wall Street, Black Lives Matter and intersectionalism, which need to explain themselves. 

Eighth (a corollary of the preceding), there were already well-established political parties on the far Left with a voice in Parliament and influence on center-left administrations. The Red-Green Party’s platform is more extreme than the American progressive movement’s. Activists have a channel to promote their causes and need not always be an protest element that is not taken seriously.

Ninth (something that could have been mentioned first), some of the main objectives of the social justice movement have already been accomplished here, most obviously universal health care, tuition-free university, and policies to prevent environmental damage and climate change. There is not as much crony capitalism and lobbyist influence to protest against.

Tenth, children here are less “coddled” than Americans, as famously documented by Lukianoff and Haidt. They are less sheltered and are encouraged to be more responsible for themselves and therefore less likely to develop an entitlement and grievance mentality.

Biology 101 
Finally (and more speculative), both academics and, where relevant, politicians appear to be stronger adherents and defenders of free speech and a scientific viewpoint than their American counterparts. Denmark is proud of its democratic tradition, which is linked to its egalitarianism. It has high voter turnouts and numerous local organizations and cooperative housing associations founded and run by citizen groups that span socioeconomic strata. There is less tendency to attempt to silence and suppress opposing political positions and probably less need for students to insulate themselves from exposure to ideas that might make them uncomfortable.

I don’t know how deeply social constructionism has influenced the social sciences here, but I doubt that the natural sciences are seriously threatened by ideological campaigns to deny the distinction between sex and gender, for example. If university faculty are under less pressure because of the factors listed above, then there is less need for them to cede an evidence-based approach.

Left swerve

It’s that time of year again – not only for the winter holidays. The Danish Social Democratic administration, along with four smaller parties, reached a deal on the 2020 budget, the first one since the election that brought them to power in June. Since Denmark is one of the few remaining European countries with a left-leaning government in power, it is noteworthy as a barometer of what is possible for the welfare state these days.

More social services and taxes
Here are some of the main features of the agreement: 

• Increased funding for staffing at day-care centers, for hiring additional nurses, for psychiatric services, for schools, and for green initiatives such as the removal of duties on electric cars. 
• The termination of fees for instruction in Danish for foreigners, of a strict residence requirement for unemployment benefits for foreigners and Danes who have lived abroad, and of the “education ceiling,” a limit to one degree that had been intended to get dilatory college students into the workforce faster. 
• A resumption of the policy of accepting “quota refugees.” 

These measures will be financed by increases in taxes and duties on cigarettes, plastic shopping bags, estates, property registration, gambling, aircraft, and leased company cars and by a termination of tax deductions for work telephones and favorable treatment of parents’ purchases of apartments for their children.

The government needed the support of all the left-wing parties, so the crux of the negotiations was concessions to their demands. The increase in day-care staffing was controversial because it will result in higher user fees (DK) since parents usually end up paying 25 percent of the costs – an extra $200 to $400 per year in this case. The perception was that voters were willing to pay for more welfare as well as for more “humane” treatment of refugees and immigrants after the Liberal Party’s infamous series of restrictive measures.

Democracy in action
The right-wing opposition voiced its usual objections that higher spending and taxes, particularly for benefit of foreigners, will hamper business and the property market. Others complained that the green initiatives are too modest and that while domestic funding was increased, contributions to international collaboration were not.

Altogether the budget appears fairly typical of center-left initiatives that are intended to compensate for or undo the excesses of the preceding center-right administration. The Social Democrats have moved rightward in recent years, especially on immigration, and these measures represent only an incremental adjustment, not a realignment. The far Left wanted to avoid a further increase in wealth inequality, and the centrist faction wanted to avoid a net loss of jobs. The budget apparently does not quite fulfill either of these wishes, which is perhaps a sign of a fair compromise. Social services should improve somewhat, economic growth is likely to slow somewhat, and in a few years the country will probably be willing to let the pendulum swing back in the other direction.

Tackling climate Armageddon
The budget agreement was swiftly followed by the adoption of a historic climate bill (DK). It stipulates a 70 percent reduction in greenhouse gas emissions from the 1990 level by 2030 and carbon neutrality by 2050. It was hailed as a model program ready just in time for the COP meeting in Madrid next week. It was endorsed by all the parties in Parliament except for the two smallest right-wing parties, partly because it didn’t contain provisions for maintaining jobs. A crucial factor was an agreement on setting binding intermediate targets in the individual years from 2025 until the overall target dates. 

There were no details about how this reduction will take place, however. That is to be determined by a broad majority of Parliament next spring, with recommendations of concrete measures from the Climate Panel. Those measures (DK) are likely to include a transition from fossil fuels for transportation to electricity and biofuels, more wind turbines and solar energy panels, less use of natural gas, better insulation in older homes, and changes in agriculture that will result in lower meat consumption and food waste.

Progressive landmark or worse than useless?
The initiative did not escape criticism. The targets were called misleading because they covered only domestic production and not emissions from imported goods. The Skeptical Environmentalist, Bjørn Lomborg of Copenhagen Consensus, maintains that the expensive plan will have a negligible effect on the climate (DK). The 70 percent reduction alone, which will cost DKK 842 billion ($125 billion), will reduce global warming by only one ten-thousandth (that’s 0.0001) of a degree in 80 years. Lomborg argues, as he has contended before, the money should be spent instead on research and development on alternative energy sources in order to help reduce emissions in the largest developing economies, particularly China and India. 

Lomborg’s critique implies that the new law is merely a form of national virtue signaling. Denmark has had a rationale for such symbolism, though. Its politicians are well aware that it is far too small to have a significant effect on global trends by itself and have therefore sometimes argued that its achievements could serve as inspiring models for others, as formerly when it topped the list of foreign aid contributors. But if these are merely stopgap measures and a waste of resources, then it’s not even sending a good signal. Lomborg has often been dismissed out of hand by climate activists, but he’s not a denier and his position should be addressed directly.

The less happy among us

Except for the free newspaper MX Metroxpress, Politiken is Denmark’s largest-circulation daily (DK). In the past, it was associated with the Social Liberal Party. Now it is formally independent, but it still has a left-leaning political stance and its readership is decidedly sympathetic to socialistic currents in the country and the welfare state in general. One expression of this approach is a tendency to see victims everywhere, that is, to identify people as neglected or slighted and to showcase their plights. Of course the media have responsibility to identify injustice, analyze its origins and workings, and place the blame where it belongs. But Politiken’s treatment seems excessive.

I’m hardly the first to notice this phenomenon, but surveying some examples offers a curious angle on the ramifications of the “welfare society” that produces the highest relative happiness rankings in the world. Few of the opinions represent the newspaper’s own explicit editorial positions. Some reflect the journalist’s or commentator’s views, some belong to the subject of the pieces, and some are from letters to the editor. But they all reflect the kind of topic the paper wants to draw attention to (the paper has an English-language extract).

Disasters natural and man-made

So who are victims? I’m not referring to the obvious, indisputable cases covered by all newspapers: hurricane victims, earthquake victims, the persecuted Rohingya. Migrants who drown in the Mediterranean. Yemenis suffering from hunger, cholera and war. Sri Lankan children kidnapped and sold for adoption. Random shooting victims and residents of Copenhagen neighborhoods with gang wars. These people may be portrayed with more or less pathos and indignation, but they are not the type that Politiken specializes in. Here is a random sample from the past couple of weeks.

Students who feel compelled to take Ritalin and beta blockers because of pressure to perform. Families with more than three children, who because of an administration proposal would see their “child-check” reduced. One hundred and ten Siemens employees in Jutland who were laid off because jobs were moved to France and Germany. Train passengers who are delayed more than an hour and don’t get the free meal they’re entitled to according to an EU directive. Divorced men who miss out on those same “child-checks” because their children have their official address with their mother.

Jobless, pedestrians, girls, the EU

Children who are bullied at school, despite the decline from 25 percent to 10 percent over the past 20 years. Local citizens who must pay for the cleanup of a nature preserve polluted by the military. Young girls who don’t read a book everyday (41 percent instead of 32 percent seven years ago) because peer pressure makes them chat on social media instead. Quota refugees whose reception the Danish administration has postponed until 2018. The unemployed who are denied permanent disability benefits and forced to undergo job training because of a stricter policy. The mentally ill and handicapped who were not approved for aid by their municipalities and won on appeal.

Children seduced into becoming compulsive gamblers by computer games. Pedestrians on a new bridge over Copenhagen Harbor who are endangered by cyclists. The EU, which is being cheated out of EUR 5 billion in taxes by the likes of Google and Facebook. Civil servants who get emails from work on Sunday. People swindled into sending money for purchases of iPhones on Facebook. Senior citizens who want to supplement their low income with home equity loans and are rejected because their income is too low. Young women who have to live with emasculated men.

Smokers, politicians, nurses, trippers

Smokers on welfare who do not get a bonus for quitting smoking as other citizens do. Hospital employees who are overworked and hospital patients who are under-served because of a reduction of funding. An adoptee from India who is perceived as non-Danish. Children born to older mothers who have an elevated risk of ADHD. Politicians whose budget proposals are heavily criticized in the media. University students who can’t find an apartment or room to rent. Children whose parents won’t let them be vaccinated. The world, which will experience more hurricanes because of global warming.

Denmark, which will get a politically unqualified US ambassador. Alcoholics, who can’t get good treatment because Danish culture encourages overdrinking. The unemployed, who are subject to a longer qualifying period for benefits. Students who are abroad for more than one year and according to a legislative proposal would lose their stipend. The elderly, who do not receive adequate care in nursing homes. Babies who suffer from understaffing at day-care centers. Everyone who does not have access to psychedelics, which according to the chair of the Psychedelic Society should be a human right.

Universal basic well-being

I’m not saying that many of these things aren’t legitimate grievances. Only noting that there seems to be an endless supply and asking, in the welfare society, where do these purported human rights end? The Danish concept of “millimeter democracy” refers to a contest in which if one person gets favorable treatment, another person feels entitled to the equivalent, and the next in turn, ad infinitum, or at least until you have accumulated the world’s largest public sector. If it confers great happiness, why does it also produce so much resentment? What used to be known as the right to the pursuit of happiness often comes to be viewed as a right to every comfort and convenience, if not happiness itself. Why not just break out the soma?

Tax cuts and inequality

Last week the Løkke Rasmussen administration presented a proposal for tax reforms called Job Reform Phase II.  The measures are intended to provide tax relief to various income groups and give greater incentives to work. They inevitably provoked controversy about how much was necessary and who benefits most.

One of the basic issues under debate on tax reform has been whether to reduce or abolish the high marginal tax rate in order to prompt high earners to work more or to reduce the rate on the lowest income group in order to bring more people into the labor force. The Liberal Alliance party had made the former its cause and had been virtually holding the government hostage with the demand. Leading economists have also endorsed the position, saying it would be revenue-neutral. The Danish People’s Party, the largest party supporting the administration, on the other hand, has demanded tax relief for low-income workers. So who won?

Take-home pay

One of the key measures was an adjustment of the employment deduction. People in the lowest income bracket would get a new deduction of DKK 4,500 ($720). The rationale is that this would make it more appealing for a segment of the population to work instead of receive transfer payments. The government estimates that the measure would reduce this segment from 50,000 to 21,000 people.

At the same time, the ceiling on the employment deduction would be removed, and this would benefit people in the highest tax bracket (with a marginal rate of 56%). There are several other measures, most of which also seem to benefit high earners, such as an acceleration of the increase in the threshold of the highest income bracket, a reduction on the tax on car purchases (to 100%) and a more favorable treatment of pension contributions.

Malleable statistics

In a simplified scheme, the administration estimates the tax savings for four income groups. It emphasizes that the lowest segment would receive the largest percentage reduction, 7.1%. The middle segments would receive about 3.8%, and the highest segment 5.7%. The absolute amounts, of course, paint a different picture. The lowest group gains about $800 and the highest (represented by an income of about $165K) gains $4,300. So the question is whether the administration is trying to sneak a tax break for the rich into the package without actually changing the marginal tax rate. And the real question is whether doing so is good or bad.

Other organizations calculate the effects differently, of course. The Economic Council of the Labour Movement estimates that the top ten percent would receive an additional $1,900 in disposable income and the lowest ten percent would receive $48, not even taking into account supplementary factors such as the tax on cars. Such estimates are always debatable. It’s difficult to make comparisons partly because of a panoply of other taxes and duties, such as 25% VAT.

Gini out of the bottle

The criticism from the left is that the measures would increase inequality. According to Cepos, the leading conservative think-tank, the reforms would increase inequality more than any other since 2001. They would raise the Gini coefficient by 0.46, from a level of about 28.8. This has elicited many protests and denunciations not only from opposition politicians but also from cultural figures. The actor Flemming Jensen, for example, launched a broadside on Facebook accusing the administration of betraying Denmark’s heritage of solidarity and equality and promoting a neoliberal “law of the jungle” that is creating a caste system while the number of homeless increases, hospitals are forced to reduce costs and so on. In a subsequent interview, he concluded that no one in Denmark needs an income of more than $160K: “Why the hell would we?” Imagine how that would play in a country with heroes like Zuckerburg and Bezos.

The administration acknowledges the rise in equality and calls it insignificant. It argues that putting more people to work and raising all disposable incomes inevitably increases inequality but the level in Denmark would remain one of the lowest in the world (the Gini coefficient for the US, in comparison, is one of the highest, at around 46-48). Finance Minister Kristian Jensen said that he has been to town hall meetings around the country and no one has ever asked about the Gini coefficient; they ask rather how the government will enable businesses to hire more people. But they were probably his party’s own constituents. The Danish People’s Party is against the abolition of the deduction ceiling.

The secret to happiness?

This debate goes to one of the central issues of the research on comparative happiness internationally. The happiest countries generally have very low inequality, but is equality the direct cause of happiness, the most important single factor, or a derivative effect of other factors? If it is a causal factor, is there a limit to its beneficial effects? It is possible that, for historical, political and demographic reasons, the socialist tendencies in Western Europe that have brought relative equality and happiness in the prosperity since World War Two are no longer able to sustain them in the current low-growth global economy.

But that’s a theoretical question. The political reality is that the populations of social democracies are split. The so-called “welfare coalition” of welfare recipients and civil servants generally favors higher taxation and a larger public sector. Those in the private sector would rather keep more of their gross earnings. There is a constant tug-of-war and a tinkering with the tax tables whenever the governing majority shifts between a center-left and center-right coalition. Although Denmark’s economy is somewhat stagnant, it is fundamentally sound. The country has the luxury of being able to take or leave the proposed reforms, which may have more symbolic value than practical consequences. Perhaps sooner than we think, robotics and AI will shift the debate on the labor market and inequality to how to implement universal basic income.

Dismantling the nanny state, gingerly

Most of the parties in the Danish Parliament have reached an agreement (DK) to reform the rules on the amount of time that people on unemployment benefits and early retirement can spend on voluntary activities without losing any benefits. Currently, they can work up to four hours without penalty, and any additional time results in a reduction of their benefits. According to the new rules, the unemployed can work up to 10 hours and people on early retirement 15 hours. For recipients of so-called flex benefits and those in a flexible job program, the current limit, also four hours, will be abolished completely. All the parties support the change except to two furthest to the left, the Socialist People’s Party and the Red-Green Alliance.

Examples of volunteer work most often mentioned are fundraising for philanthropical organizations and serving as assistant soccer coach. There have been cases of clubs needing to close or reduce their activities because they didn’t have enough staffing. Sports teams in Denmark are generally run by private clubs; they aren’t associated with schools and universities. Denmark has an extensive system of non-profit associations for all kinds of activity. That’s why rules in this area have a significant effect.

Win-win or zero sum?

The proponents of the reform argue that such activities enable volunteer organizations to thrive, they are satisfying and healthy for the volunteers, they give the volunteers experience and contacts that can help them find a job, and so on. Why is there a limit at all, one might ask? Isn’t volunteering always a good thing for both the participant and the recipients of the work?

The argument against it (DK) is that it reduces the need for paid work and keeps more people unemployed. The unemployed are in effect taking jobs away from themselves. They also have less time to seek paid work. A two-year study showed that the more time the unemployed spend on volunteer work, the longer they remain unemployed. Every spokesperson for the parties in favor of the change also adduces the need for such limits and maintains that the new ones provide a better balance.

Rules and subrules

The rules also distinguish between voluntary social activities, which are not subject to these limits, and voluntary unpaid work, which in principle could be performed by paid employees. They also distinguish between two subcategories of voluntary unpaid work: operations and maintenance on the one hand, and anything else on the other. According to the reform, it will now become possible for people to perform minor operational and maintenance tasks with a reduction in benefits in small organizations that do not ordinarily pay people to do such work.

These are the nuts and bolts of the nanny state. The rules on unemployment and illness benefits reportedly fill 26,000 pages (DK). I don’t know the extent of similar rules on volunteer work in other countries, and I don’t understand the economics behind the criticism of the reform. It seems unlikely that, if people are prevented from volunteering, an organization will always be able to hire a paid employee to fill the job.

Surveillance and criminality

The other question that comes to mind is, who’s counting? How do the municipalities, which administer unemployment benefits, know whether Assistant Coach Lars spent four hours or five hours with his six-year-old and his soccer teammates last week? Does the picnic lunch after game count as well? Driving the kids across town to a game?

The unemployed need to report to the municipality about their job-seeking activities, but are they questioned about everything else they do? Are the positions of volunteers published in association documents? Are fellow citizens encouraged to rat on volunteers as though they were working in the shadow economy to evade taxes? People on early retirement must report earned income, which above a certain amount can also reduce benefits. But I doubt that they need to show up at public agency regularly to report on their leisure activities.

Whose money is it?

Another factor to remember is that both unemployment benefits and early retirement benefits are based on individual contributions to programs resembling insurance policies. Both of them receive public subsidies, but any reduction in benefits for exceeding these limits represents a proportional loss of one’s own contributions. One’s own taxes also go toward the subsidies.

The reform is a positive step toward a more realistic treatment of social behavior. There is much less charitable giving in Denmark than in the US because the state takes better care of people in need and taxpayers feel they “gave at the office.” Because of the large number of clubs and associations, volunteering to support and administer them is probably the main way that individuals express their altruistic impulses. And the unemployed have more time to do it and probably derive greater benefits from it. If we return the basic question about what makes people in social democracies happier than those in countries with freer market capitalism, it isn’t because their bureaucracies have limited or criminalized such activity.