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October 16 2015

Bernie Sanders' Denmark

Rachel DiCarlo Currie

The first question that CNN host Anderson Cooper asked Bernie Sanders at Tuesday’s Democratic presidential debate was a blunt one: “How can any kind of socialist win a general election in the United States?” In response, the Vermont senator said that his campaign would “explain what democratic socialism is.” According to Sanders, democratic socialists are scandalized by America’s economic disparities and are eager to expand the U.S. welfare state. “We should look to countries like Denmark, like Sweden and Norway,” he declared, “and learn from what they have accomplished for their working people.”

Over at National Review, Kevin Williamson has done a fine job enumerating all the things that Sanders doesn’t know and/or failed to mention about the Nordic countries. Leave aside Norway — whose massive oil reserves have enabled it to remain more statist than its neighbors — and look at Denmark and Sweden. Sanders may not realize it, but Danish and Swedish economic policies have changed a great deal since the high tide of Scandinavian socialism in the 1970s and 1980s.

For example, Denmark ranks ahead of the United States in the 2015 Heritage Foundation Index of Economic Freedom; in fact, Denmark has outranked America three years in a row. It also outranks America in the World Bank’s 2015 Ease of Doing Business Index. Denmark has the most flexible labor markets in all of Europe, and it has a combined statutory corporate-income-tax rate of just 23.5 percent; the comparable U.S. rate averages 39 percent.

As for Sweden, it is a nation with universal school vouchers, a partially privatized social-security system, no gift or inheritance taxes, and a corporate-tax rate of only 22 percent. Long known for its bloated public sector, it has become a genuine leader on deregulation and privatization. In 2013, The Economist reported that “Sweden has gone further than any other European country in embracing the purchaser-provider split — that is, in using government money to buy public services from whichever providers, public or private, offer the best combination of price and quality.”

It’s true that, by American standards, Denmark and Sweden have extremely high overall levels of taxation. (In 2013, total tax revenue accounted for 48.6 percent of GDP in Denmark and 42.8 percent in Sweden, compared with 25.4 percent in the United States.) Yet their tax systems are also significantly more regressive than the U.S. system. Indeed, Denmark and Sweden finance their generous welfare programs by taxing consumption quite heavily: Each has a standard value-added-tax rate of 25 percent.

“If Senator Sanders were an intellectually honest man,” writes Williamson, “he’d acknowledge forthrightly that the only way to pay for generous benefits for the middle class is to tax the middle class, where most of the income earners are. Instead, he talks about taxing a handful of billionaires to pay for practically everything.”

Speaking of generosity, we should also note that America spends more on social welfare than many people think. According to an analysis by Peterson Institute scholar Jacob Funk Kirkegaard: “Taking the full effects of tax systems and social spending from both private and public sources into account, the United States is seen to be devoting more resources toward social purposes than is generally acknowledged. In fact, only the French spend more than Americans, while the alleged welfare-addicted Scandinavians and Europeans spend less on average.”

One final point: It should go without saying (but apparently it needs saying) that adopting Swedish policies in America — or in any country where most people are non-Swedes — would not necessarily yield Swedish outcomes. (As Williamson puts it: “Any bets on how well the Danish welfare state is going to play in Mississippi and New Jersey?”) The principal determinants of a nation’s future are demography and culture. That’s why so many Swedes now consider immigration to be the most important issue facing their country.

Independent Women's Forum is an educational 501(c)(3) dedicated to developing and advancing policies that aren’t just well intended, but actually enhance people’s freedom, choices, and opportunities. IWF is the sister organization of the Independent Women’s Voice.​
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