Utopia is a loaded concept and likely unattainable much like perfect knowledge or enlightenment, but an ideal concept does have the power to potentially move people in a more promising direction. Of course, that ideal needs to be based on some logic and realistic expectations, otherwise naïve faith could lead people to a very disappointing outcome. Imagine living your one life as a saint for the primary purpose of receiving access to the pearly gates only to find no such gates exist. Or, imagine deciding to blow yourself and hundreds of innocent people to bits in exchange for twenty beautiful virgins only to discover all that you achieved was a heinous act and eternal darkness. If the saint performed saintly acts without expecting access to the pearly gates then there would be no sense of disappointment when time expires – the saintly acts in and of themselves contain both the gift and the reward, nothing more, nothing less.
Denmark, a nation of 5.5 million people, has consistently ranked number one on the “happiness” or contentment index from various surveys Happiness Survey Example. The people who are born and raised in this culture and society appear to be more content than citizens of any other nation on the planet. Why? Before I go into some broad strokes that make Denmark unique, I wanted to post these YouTube videos from two young Danes who casually try to answer the question for us. Why go into a bunch of facts and broad statements when two young people from the country can attempt to explain this mystery in their own words and mannerisms.
Aren’t those two videos interesting? I hope you took the time to watch at least one of them. One tends to focus on the peace of mind that comes with a socialistic welfare state and the other narrows in on setting lower expectations that mitigate anxiety and enable one to be more content with their lot in life. Of course these are just two points of view from over 5 million people who live in Denmark day in and day out. It is impossible to do this subject justice on a blog post or two. My real purpose is to do some high level comparisons between the top five “happiest” nations and perhaps juxtapose these high-level findings relative to the United States (what many often call “the greatest country on earth”). But I think Denmark deserves a post all to itself since it consistently claims the top spot on the “happiness” index.
I am going to use this paragraph to simply outline with broad short strokes what is unique about Denmark. Denmark has the highest level of income equality in the developed world and the highest minimum wage – a dishwasher can make $25 dollars per hour. The tax rates are the highest of any developed country and that includes a Value Added Tax (on most goods purchased including food) at 25%. The progressive effective tax rate can start at 40+ percent and reach 70 percent, depending on your income level. But, these high taxes enable free tuition through college and the government actually pays college students a small amount of money to go to school – they enjoy a 98% literacy rate. Healthcare is covered by the state. If you lose your job the government will pay you 90% of your past salary for up to four years. Maternity leave is paid for from six months to a year. Child care is partly paid for by the government. If you have worked in Denmark for 40 years you will get a pension upon retirement. The state helps with elder care. Some other interesting facts are that Denmark is environmentally progressive and one-third of the citizens use a bicycle as the primary mode of transportation. Tax on an automobile purchase is almost 200%! Now you know why bicycles are popular. The country ranks number two on the corruption index and people therefore trust each other and their government. Violent crime is very rare. Unemployment is very low.
Although Denmark is socialist, that doesn’t mean they are communists. In fact, Denmark is considered one of the most competitive economies in the world (according to World Economic Forum, IMF, and the Economist) and enjoys the 7th highest income per capita. Denmark has one of the freest financial and product markets in Europe. So what we have here is a very competitive, productive, and free market economy that is capitalistic, but a socialist model that tends to eliminate wide variances in citizen income and uses this re-distribution to educate the young, care for the sick, and enable the elderly to enjoy a relatively secure retirement.
The word socialists, as the young lady in the YouTube video alluded to, conjures up images of drab communists walking around like zombies in rags. Apparently, that doesn’t seem to be the case when that socialistic model is funded willingly (I am sure many Danes may find another word to replace “willingly”) through high taxes from citizens that are highly educated, literate, competitive, and relatively happy with less stress and anxiety. In fact, they must be very productive if they come in third in terms of the least amount of hours worked! It seems that Denmark might counter the often pure capitalistic argument that higher taxes on the wealthy will lower innovation, productivity, and motivation. It also helps that the government appears to be somewhat competent with the tax revenues (I am sure some Danes would disagree) as the country’s debt to GDP is just 39.5%.
In essence, the capitalistic socialistic model in Denmark is built for the young, the sick (even if sickness temporary), the elderly, and the middle class. In general, the majority of the young have equal opportunity to pursue higher education and their future occupation regardless of what family they are born into. Of course, equal opportunity doesn’t mean everyone’s outcome should be equal. A very talented individual can still make relatively good money. A citizen that earns $1 million in a year may have a 70% tax burden, but he/she would still net $300,000 in a year. In contrast, a citizen that earns just $50,000 in a year and faces a 43% tax burden only brings home $28,500 bucks. There still exists salary or wage inequality, but the variances between those that have much and those that have less aren’t as extreme as in pure capitalistic societies with lower tax rates and loop holes. And, I am sure the middle class in Denmark have learned to make their disposable income go a long way through self-control by limiting their needs and wants for nice cars, big houses, and lots of things. Although they hit the high rank on the happiness or contentment index, that doesn’t mean they have easy lives filled with anything their hearts desire. They must simply have the discipline needed to enjoy what they have. Many of these people bike miles in the rain and snow to get to work as opposed to driving in a warm Mercedes-Benz with heated seats that they are leasing through debt or credit.
But Denmark isn’t immune from current or future cracks in the socialistic capitalistic framework. For example, the country is currently experiencing a skilled labor shortage High income tax worsens a labor shortage . Why? Apparently many of the young are jumping ship to work abroad to avoid the high tax burden. In short, they get all the benefits of growing up and getting educated “for free” and then take advantage of the system by working abroad. I have a solution to this “free-rider” problem, but I doubt the Danish people would agree with me as they appear to be a very free-spirited people. My solution would be that those working abroad would get slapped with a nice bill for all the tax revenue used to raise and educate them in the country before they jumped shipped to earn their windfall gains. Other potential problems are that Denmark relies on exporting services and products to the global economy. The current problems in the global economy adversely impact their export income which puts strain on their ability to keep funding their expensive citizen care. They have, however, fared pretty well during the current meltdowns in the United States and Europe, but who is to say the global economy isn’t going to head further south?
There is much more to discuss about Danish culture and there are many more sources to explore. In fact there is a blog that I am trying to get access to in order to learn more. Truth be told, one really needs to live in Denmark for an extended period of time to really gain some insight. I would love to observe the Danes in public going about their business, watch their news and favorite TV shows, hang out in cafes and bars and talk to the people including students, observe the landscapes and the architecture, and visit other locations besides just Copenhagen. For now, all I can offer is this short post and some articles below that were sources for some of this content. Regardless of this short post and material, I feel like they are on to something important in their mix of capitalism and socialism. But, applying such a system to other large countries that don’t have the culture or momentum of this hybrid model would be like trying to reverse the course of a tsunami. The potential learning points, however, can be viewed as beacons to a long-term course or strategy. Could the Danes socialistic capitalistic model be a distant beacon to humanity? Could such a system, if rolled out carefully over time, in fact become even more sustainable and practical if the world at large adopted the philosophy?
Some source articles:
Why danes happier than americans