Tuesday, June 25, 2013

The Post-Work Society In Denmark

A while back, The New York Times ran an article entitled ‘Danes rethink welfare system generous to a fault.” Since this article has a direct bearing on some of the topics we covered in The Post Work Society Is Not a Future State..., I thought I’d take a closer look.

Like many other locales, the Danes seem to be moving into a post-work society. They are doing this with considerably less chaos and social dysfunction than many other places. The article points out that Denmark is frequently listed as the happiest place on earth.  So what then, is the fault?
The Danish model of government is close to a religion here, and it has produced a population that regularly claims to be among the happiest in the world. Even the country’s conservative politicians are not suggesting getting rid of it.
Denmark has among the highest marginal income-tax rates in the world, with the top bracket of 56.5 percent kicking in on incomes of more than about $80,000. But in exchange, the Danes get a cradle-to-grave safety net that includes free health care, a free university education and hefty payouts to even the richest citizens. Parents in all income brackets, for instance, get quarterly checks from the government to help defray child-care costs. The elderly get free maid service if they need it, even if they are wealthy.
And instead of being crushed by 1 trillion worth of student debt like in the United States:
Students are next up for cutbacks, most intended to get them in the work force faster. Currently, students are entitled to six years of stipends, about $990 a month, to complete a five-year degree which, of course, is free. Many of them take even longer to finish, taking breaks to travel and for internships before and during their studies.
Sounds awful doesn’t it? Yet the article warns us,
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.
There’s that dreaded aging population again. How dare those people keep staying alive! If these geezers would just drop dead like they used to on cue, we wouldn’t have any problems apparently. I propose a moratorium on all future medical research, we’ve just got to stop inventing ways to prolong life - the economy demands it! Maybe we should set up suicide booths like in Futurama to solve this problem.
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.
So, society seems to function all right now with these people currently not in the workforce. What’s the problem? Would we rather they be unemployed or are we going to “create” jobs for them? Isn't the youth unemployment rate in most European countries something like 25 percent? Will dumping more people into the workforce magically create jobs somehow?
In 2012, a little over 2.6 million people between the ages of 15 and 64 were working in Denmark, 47 percent of the total population and 73 percent of the 15- to 64-year-olds. While only about 65 percent of working age adults are employed in the United States, comparisons are misleading, since many Danes work short hours and all enjoy perks like long vacations and lengthy paid maternity leaves, not to speak of a de facto minimum wage approaching $20 an hour. Danes would rank much lower in terms of hours worked per year. In addition, the work force has far more older people to support. About 18 percent of Denmark’s population is over 65, compared with 13 percent in the United States.
Wait a minute, wait a minute, wait a minute. There are actually more people in the workforce than in the United States? Even with humane amounts vacation and minimum wages? And this is a problem? Economist Dean Baker has done a better job of ridiculing this than I:
So in spite of the generous Danish welfare state a higher percentage of its working age population works than in the United States. (Actually Denmark ranks near the top of the world in employment to population ratios.) Yet, somehow this doesn't really count because people in Denmark get vacations, work shorter hours, and have a higher effective minimum wage.

This ranks pretty high in the non sequitur category, apparently when you want to bash the welfare state, the rules of logic apparently do not apply. Danes, like most Europeans, have opted to take much of the gains in productivity growth over the last three decades in the form of shorter work years rather than higher income. (One interesting result of this practice is that we have some hope to save the planet from global warming -- greenhouse gas emissions are highly correlated with income.) Of course Danes still work about 8 percent more hours on average than hard-working Germans, according to the OECD. If there is a problem in this picture, the NYT might want to devote a few paragraphs to telling readers what it is.

As far as the $20 an hour effective minimum wage, isn't the problem of a high minimum wage supposed to be that it creates unemployment. But the NYT just told us that Denmark has higher employment... (My brain hurts.)
Surely, then, this is ruining the economy for everyone, right? But the article informs us:
While much of southern Europe has been racked by strikes and protests as its creditors force austerity measures, Denmark still has a coveted AAA bond rating.
And Dean Baker points out:
According to the IMF, Denmark had a ratio of net debt to GDP at the end of 2012 of 7.6 percent. This compared to 87.8 percent in the United States. Its deficit in 2012 was 4.3 percent of GDP, but almost all of this was do the downturn. The IMF estimated its structural deficit (the deficit the country would face if the economy was at full employment) at just 1.1 percent of GDP. Furthermore, the country had a huge current account surplus of 5.3 percent of GDP in 2012... This means that Denmark is buying up foreign assets at a rapid rate. ...
And that's even by using the standard Neoliberal econometric models to measure the 'success' of a society. By the standards of, say, Gross National Happiness, the Danes would surely rank pretty high. All their levels of social dysfunction are pretty low too (remind me again how many mass shooting incidents happen in Denmark - here they happen every few weeks).

The article digs deep to show just how lazy the Danes are, and how government has sapped their moral fiber:
One study, by the municipal policy research group Kora, recently found that only 3 of Denmark’s 98 municipalities will have a majority of residents working in 2013. This is a significant reduction from 2009, when 59 municipalities could boast that a majority of residents had jobs. (Everyone, including children, was counted in the comparison.)
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.
Wait a minute, did they say, everyone including children? How many jobs are done by children? And didn't they just say that Denmark's population is older than most? Now they're calling alarm that they have people on disability? And quick math says that the amount of people under 40 on disability is only 14 percent. Get to work, gramps! Maybe they need Danish Wal-Mart greeters.

 As a commenter points out:
So a large proportion of the population is too young or too old to work? Who couldaknown?!?

In 2011 the US employment to population ratio was 45.3%. By way of comparison it was 49.7% in Denmark: http://www.bls.gov/ilc/intl_gdp_capita_gdp_hour.htm#table08

In fact in all of US history a majority of Americans have never been employed. The highest rate ever was 49.0% in 2000: http://research.stlouisfed.org/fred2/series/USAEPP?cid=32283
It's interesting to note that in addition to Denmark, other hotbeds of European welfare state socialism like Austria, Finland, Germany, Luxembourg, the Netherlands, Norway and Sweden also had a higher proportion of their population working than the US in 2011. Does this mean anything? Not particularly. It's about the most useless statistic anyone can imagine
I’m sure the article will provide plenty of ammunition to say that the “welfare state” or “Eurosocialism” or whatever derogatory term you want to use, doesn’t work. But to me it argues the opposite. I don’t see why this “welfare state” isn’t working, especially when you compare it to the United States, where there are actually less people in the workforce, three-quarters of all workers are living paycheck to paycheck, two-thirds of all workers are in low-paid McJobs, our educational achievement is atrocious, our inner cities look like third-world slums, crime and drugs are rampant, and on and on. As someone posted in the comments section, half of the residents of New York City are poor or near poor. And yet, the article claims that Denmark has a problem? WTF? As the Twitter comment at the beginning of the EV post says, "As @DeanBaker13 points out, that NYT story on Danish welfare didn't really make the case that Danes aren't working."

A similar attitude is expressed in this BBC article:
The city [Paris] remains as delightful as ever. The restaurants are just as good, and if they are more expensive that simply makes it easier to get tables. The health service is probably the finest in the world. Public transport is excellent, though taxi drivers are a miserable lot.

After the Socialist Francois Mitterrand's famous victory in 1981, at a time when Britain under Margaret Thatcher was cutting back fiercely on government expenditure, the French instinct was always to spend more. Hospitals, transport, culture - money was lavished and the results were sensational. Pensions and state benefits were among the best in Europe. The streets were beautifully clean. To come here from depressed, dirty London was to feel a cloud lifting.
But, once again, there's no way the French can continue to "afford" this high quality of life:
Everyone knows that the combination of a short working week, early retirement, big pensions and excellent health benefits does not add up. But when do the cuts start? The waiting is becoming intolerable.
That's right, "everybody knows" that these things "don't add up." What does add up, apparently, is working sixty hours a week until you drop dead for minimum wage and going deeply into debt for basic education and health care. Exactly why can’t the French “afford” any of this? Food shortages? Fuel shortages? Lack of technical knowledge? Or is it really just to pay off the bankers? The article doesn’t say, yet everybody apparently "knows" it. As a commenter put it, "Shorter NYT: 'The fact that Denmark's people aren't working themselves to death for peanuts is clear evidence that the country isn't running as well as it could be, based on the critical 'how much wealth gets hoovered up by the 0.1%' metric.'"

Isn’t it amazing how simultaneously every country on earth can no longer “afford” to give people the quality of life that they managed to do for the past fifty years or so? And, by the way, that's after fifty years of exponential growth. But why? And don’t say energy, because if energy were the problem, as Dean Baker pointed out, the European way would be far superior. Denmark has implemented some of the strictest renewable energy standards in the world. Besides, there are no shortages, and the wealthy keep capturing more of the income, meaning the wealth of society overall is not shrinking. As another commenter asks, "Grant for the sake of argument that Danes are underemployed, shouldn't we be asking how they still manage to provide for their citizens so well?"

Let’s come to the real reason the article was written – jealousy and spite. What they can’t prove through facts, they prove through anecdote, by spending the lion share of the article describing Denmark’s very own Cadillac (Audi?) Driving Welfare Queens:
It began as a stunt intended to prove that hardship and poverty still existed in this small, wealthy country, but it backfired badly. Visit a single mother of two on welfare, a liberal member of Parliament goaded a skeptical political opponent, see for yourself how hard it is.

It turned out, however, that life on welfare was not so hard. The 36-year-old single mother, given the pseudonym “Carina” in the news media, had more money to spend than many of the country’s full-time workers. All told, she was getting about $2,700 a month, and she had been on welfare since she was 16.

Carina was not the only welfare recipient to fuel the sense that Denmark’s system has somehow gotten out of kilter. Robert Nielsen, 45, made headlines last September when he was interviewed on television, admitting that he had basically been on welfare since 2001.

Mr. Nielsen said he was able-bodied but had no intention of taking a demeaning job, like working at a fast-food restaurant. He made do quite well on welfare, he said. He even owns his own co-op apartment.

Unlike Carina, who will no longer give interviews, Mr. Nielsen, called “Lazy Robert” by the news media, seems to be enjoying the attention. He says that he is greeted warmly on the street all the time. “Luckily, I am born and live in Denmark, where the government is willing to support my life,” he said.
So that's two people in a nation of over five million. Face it, the only real purpose to the article is to mine our resentment and get us to become angry at those “lazy” Europeans who enjoy vacations and childcare and free education and so on. It’s to play on our crabs-in-a-bucket mentality, which is the tool that is always yielded by the wealthy to play us against each other and make sure that things like this are not implemented. Or, where they are implemented, that they are promptly dismantled for tax cuts to the wealthy, corporations, and the investor class.

As one of the EV commenters pointed out, this article is lifted almost verbatim from one published by a right-wing Danish newspaper, the Copenhagen Post. The media has been involved in campaigns to smear the "welfare state" ever since it was bought up by the wealthy decades ago, especially by publishing hack pieces like this to play on working people's jealously and anger. As this commenter says, "In any large-scale government spending program, there will be some who take advantage of the situation; I understand a defense contractor may have engaged in this once or twice (!). But the austerity-minded like to use such loafer examples as a way to push through wholesale changes, rather than small reforms that address the abuses." The phrase "cutting off one's nose to spite one's face," was invented for situations like this.

It always amazes me that the people who constantly tout our "frictionless" capitalism via the Internet, our automated factories, artificial intelligence like Watson, advances in robotics and biotechnology, efficiency improvements and the like, turn around and say in the same breath that the things like providing for retirees or universal health care and education are "beyond our means." Really? Are you kidding me?

And what exactly does "beyond our means" even mean in this context, anyway? Who determines that? When you ask it, you get nonsensical responses. Either they say we don't have enough money, which makes no sense, because money is created by the government, or that we somehow owe China a bunch of money for some reason, so we need to close schools and libraries. It usually goes something like this, "we get all our stuff from China, and all they get is our useless paper." Well, whose idea was that? Certainly not that of all the people laid off from good-paying factory jobs over the past 40 years. No, it was the idea of the same people who are demanding that welfare be dismantled now. Besides, if that were the problem, the solution would just be to reactivate those factories and start producing all our stuff domestically. I'm all for it, who's in? But, we're told, if we manufactured stuff domestically in American factories, Americans wouldn't be able to afford to buy any of it. Who came up with this crazy system?

It's a nice morality play that appeals to our inner Calvinist, but it has no real meaning. The next time someone gives a line about our "debt" and how we "lived beyond our means," you might want to politely take the questioning a little further and ask them what the heck they mean (or ask, "who's 'we,' kimo sabe?"). Typically when the media tells you that "everybody knows" something, it's complete and utter bullshit.

It would be a shame if the Danes decided to dismantle a system that's given their people the highest quality of life in the world. The same is true for France. The only "fault" here lies in the fact that the one percent cannot crush the citizenry like they can here. So when you hear about how this "doesn't work," ask yourself where the message is coming from. As Stephen Jay Gould used to say, "don't you believe it!"

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