Time to End Welfare in Denmark as We Know It?

 The New York Times has a penchant for contradictory reporting and editorializing on certain issues, despite fancying itself as the paper of record. For example, when faced with the matter of term limits in the years 2007-2009, the Times advocated that voters in Venezuela reject the proposal to abolish term limits, "for the sake of Venezuela’s democracy." But just months earlier, in supporting the change to New York City law to allow Michael Bloomberg to run for a third term as mayor, the Times editorialized that term limits "diminish democracy, arbitrarily deny choice, reduce accountability and squander experience."

Over the past two weeks, a contributor to a Times blog suggested that policymakers were joining the growing chorus of voices rejecting austerity; this was joined by a report of Greek children going hungry under austerity and an editorial arguing that "from the beginning, it was clear that economic austerity (cutting government spending and public benefits) and structural reforms (relaxing tough labor laws and privatizing state-owned companies, for example) could not be accomplished simultaneously during a deep recession."

Thus was it odd but not completely surprising to then find this article on Denmark's welfare state over the weekend:

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. . . .

But few experts here believe that Denmark can long afford the current perks. So Denmark is retooling itself, tinkering with corporate tax rates, considering new public sector investments and, for the long term, trying to wean more people — the young and the old — off government benefits.

To the average American, Denmark's high tax burden (at 56.5% for those in the top bracket), high wages, and broad set of social services provided by the Danish government may seem excessive, but in Denmark they remain supported by the population at large and a broad political consensus.

It goes unmentioned in the article that Denmark remains apart from the sovereign debt crisis in the Eurozone by possessing its own currency, the krone, and had strict banking regulations which insulated the country from the worst of the 2008-09 Financial Crisis. Furthermore, besides Denmark's AAA credit rating noted in the article, Denmark possesses low inflation (2.6%), unemployment levels comparable to the U.S., a labor force participation rate comparable to the U.S., public debt (45% of GDP in 2012) at around half that of the U.S., Canada, or Germany, and is considered to be the 5th easiest country in which to business in 2013 (right behind the U.S.) by the World Bank.

Certainly, as its population ages and as the current economic forecast for the country turns out to be less rosy than originally projected, Denmark is welcome to reconsider the size and scope of its social safety net. But instead of reporting on a two-sided policy debate, the reporter made a conscious choice to focus the article on two Danish abusers of the welfare system, 36-year-old "Carina" and 45-year-old Robert Nielsen, who each have collected benefits for a decade or more while voluntarily remaining idle. Though unlike Ronald Reagan's famous "welfare queen" these individuals are real people and not a fictional creation for the campaign trail, they reflect dramatic exceptions rather than the rule. Indeed, if Denmark is currently doing as well as the U.S. with a far more comprehensive welfare state and a comparable number of people participating in the labor market, what then would be the rational basis for cutting benefits?

Instead, the invocation of the "welfare queen" image serves as a morality play, leading us to question the welfare state and instead consider austerity measures. As David Graeber, Robert Kuttner, Mark Blyth and others have ably demonstrated, debt is conflated with guilt, sin, and shame. For the New York Times to report this sanctimonious tale of Danish "welfare queens" with no countervailing voices and few contradicting facts, the effect is to shame the Danish into action to cut back on their social safety net and to convince readers elsewhere to support these efforts. Instead, the Times should be ashamed for delivering this selective and unwarranted report without the necessary context.

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