Selon les auteurs, les niveaux élevés de liberté économique sont à l’origine du niveau de vie élevé du Danemark.
Consulter le document »
Denmark is a highly regarded country for good reasons. Danes are healthy, wealthy, and happy. And they’ve been so for quite a long time. Foreign admirers both left and right—often point to Denmark as a policy model, but few seem to appreciate the country’s unusual combination of free enterprise and welfare state. In this short book, we examine the Danish economic model, including its origins, and draw some important lessons from
For more than a century and a half, Danes have been among the most economically free people on earth, and they remain so to this day. They can start and run businesses with little government interference. They can exchange with whomever they want—domestically or internationally—on whatever terms they want, and again the state does not interfere. They can accumulate savings knowing that the government will not inflate away their nest eggs. They can acquire and use property, confident that the state will protect their property rights. And they can contract with others, knowing that the state will enforce these contracts. So, the first lesson we can draw from the Danish experience is that the economic freedom Danes historically have enjoyed underlies Denmark’s high standard of living.
The second lesson, and the one exception to their economic freedom, is that Danes pay for their welfare state with some of the highest taxes in the world. Denmark’s two largest sources of state revenue are its value-added tax (VAT) and its personal income tax. Middle-class Danes largely bear the burden of these two taxes. All Danes pay the VAT when they buy goods and services. And at 25 percent, the VAT is one of the highest in the world. Denmark’s top personal income tax rate is also among the highest in the world. But it’s not just the wealthy who pay it—the top rate kicks in at a comparatively low level of income. So, while Danes have a large and expensive welfare state, they don’t foist the bill onto corporations or the wealthy. Instead, they all pay for it.
Although this model works reasonably well for Denmark, it does have its economic limits. And that brings us to the third lesson: when Denmark experimented with an unsustainably large government, it did not go well. For most of its history, Denmark had a relatively small government. Even as late as 1970, the Danish government accounted for a smaller share of the economy than did the governments of the United States, the United Kingdom, Canada, and Australia. But from 1970 through the early 1990s, the Danish government grew dramatically, accounting for nearly 60 percent of gross domestic product by 1995. Government revenue did not keep pace with spending, so the government ran huge deficits. Debt piled up and inflation spiralled out of control. But something that can’t go on forever, won’t. And by the 1990s, nearly all Danish policy makers understood that they had to make a change. They began reducing spending, bringing it in line with government revenue. They also committed to sustainable budgeting practices, limiting both deficits and the growth of debt. As the government moved toward a more balanced budget, both inflation and interest rates declined. Danes found out the hard way that there are limits to big government.
In this pre-release, we focus on Denmark’s historical roots as an economically free society with limited government. The rest of the book will discuss what happened when Denmark began to experiment with larger government and then found a more sustainable model.