Denmark is actually a profoundly capitalist and free-market economy and society. Actually, it's more capitalist than the United States. That's why Denmark's economy is able to function under the admittedly crushing burdens of its taxation levels. Denmark simply isnโt socialist, itโs a social democracy. The DSA, Alexandria Ocasio-Cortez, Bernie, and the others are profoundly confused about what it is they admire and desire.
Various Danes have been quick enough to
correct Regan. Businesses are privately owned (thatโs capitalism), they compete with each other in a free market (that's capitalism), and both of those are antithetical to any working definition of socialism as it has been practiced. I've also made this point around
here before. But itโs worth going a little further, perhaps.
The two major listings of economic freedom have Denmark well up at the top. The Fraser Institute, talking about human freedom, has
Denmark eighth in the world, with the U.S. at 17th. The
Heritage Foundation has Denmark at 12th and the U.S. at 18th in economic freedom. Both these organizations love capitalism and free markets, so whatever the bias is in this ranking system itโs not in favor of socialism.
Scott Sumner has, and rightly to my mind, convincingly argued that Denmark is the most economically free country on the planet. To which I add one more thing โ theyโve got to be. For there are two ways to slow down wealth creation in an economy: trying to regulate it and trying to tax it. We can also work this the other way around, if we want to get richer weโve got to balance how we regulate and how we tax. The fastest way to make the people rich is to do very little of either, as with Hong Kongโs
laissez faire. Some people donโt like that, which is fine โ democracy is the way we work through such disagreements. The Danish, indeed Nordic, system is social democracy. Go light on the regulation, have as free an economy as itโs really possible to have, then tax the heck out of it to buy free college and child care.
Thatโs not my preferred outcome, Hong Kong is, but Iโll be dead by the time the millennials take power, anyway. The point that needs to be understood, though, is that there has to be a choice between regulation or taxation. If you want the money to buy nice things, youโve got to lighten up on the regulation, so the wealth you want to tax is actually generated. If you try to have both, significant regulation of who may do what and how, plus that tax burden of 45 to 50 percent of everything everyone does, then the system isnโt going to generate wealth. Youโll end up with something more like Greece. Itโs either/or โ both does not work.
Now, obviously, itโs fun for liberals that a Fox Business host compares Denmark to Venezuela, but itโs not Regan that really needs to learn the lesson. Itโs those millennials, the progressives in the DSA, that do. Youโve a choice to make. What you desire isnโt socialism, itโs social democracy. To make that social democracy work youโre going to have to ease up on the regulation of the economy so that thereโs room for you to raise the tax burden and still get economic growth. Danish taxation plus American-style regulation doesnโt work. So, which do you want?
No, there isnโt a middle way here. The Danish social democracy is already that compromise. You may or may not pick wisely, but youโre most certainly going to have to choose.
Tim Worstall (@worstall) is a contributor to the Washington Examiner's Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute. You can read all his pieces at The Continental Telegraph.
