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January 02, 2007

Try Some Delicious Danish?

Some interesting discussion between Tyler Cowen and Matt on whether we can scale up Denmark's mixture of economic security and dynamism for a country the size of the US. The basis for this discussion is Jon Cohn's excellent examination of the development and success of the Denmark model, which is well worth a quick read. In short, they've made the most liberal of the neoliberal visions manifest: The economy is market-oriented and ruthlessly adaptive, while the government offers a robust safety net, a high level of economic security, and a promise that if the unemployed seek work, the government will make sure the work is there, and offer the training and counseling necessary to help the displaced.

The economic outcome has been impressive: High GDP growth, low unemployment, high average incomes, low inequality, and dirt-low poverty. On the other hand, Denmark is a country of 5 million, more akin to a large city than the United States. Few of the Danish work in the low-paid service economy, which tends to run off imported labor. And Denmark's small population and high cultural cohesion exempts them from the problems of a giant urban underclass who've grown culturally alienated, been systematically exempted, and become ever more distrustful of the country's economic mainstream.

That said, it isn't clear to me why we don't give a Danish-style model more of a shot. What's fascinating about the American system is that, for all its federalism, there's precious little variation. The most generous cities display only a couple degrees of difference from the least. Santa Fe may have a living wage, but it doesn't have single-payer health care, or paid maternal leave, or massive job retraining. We hear talk about the genius of the states, but they all tend to work on basically the same problem, in basically the same way, leaving little room for brilliance to burst forth.

In part, that's because state exploration is shackled by funding streams, many of which trickle down from the federal level. But this sort of experimentation seems like the sort of thing the government should be offering grants for (in much the way it once did for welfare): Why we've not helped a major US city create a generous universal health program (San Francisco, it should be said, is trying) baffles -- if the hoped-for savings from integrated care could help lower costs from chronic disease in ravaged urban enclaves, the country would learn a lot, and possibly save even more. Same goes for serious paid maternal leave efforts, and job retraining, and all the rest. The Danish model may not work here, but then again, it may, and the nice thing about having 300 million people rather than five million is that it's not particularly hard to try.

Also at Tapped

January 2, 2007 in Europe | Permalink

Comments

It seems like it would be a problem for cities because they can't capture all the benefits of the spending that such programs would entail. If Santa Fe offered massive job retraining, and then 50,000 people took that training and got jobs elsewhere while 50,000 untrained people move in, the city is kind of screwed. When you're a nation you can control who comes in (and leaving is a lot harder too).
The area it might work is health care, because you say that if you're a resident you're covered at the time of an illness (maybe with some minimum residency time)- health care is more an immediate support issue than a long term thing like education or job training.

Posted by: SP | Jan 2, 2007 1:26:53 PM

Although, to add to myself, even health care isn't a great issue- you can't do preventive care, which is what saves a large sum in a well run system, if people live somewhere else when they need that preventive care and only move to your city just before the issue becomes acute.

Posted by: SP | Jan 2, 2007 1:28:35 PM

Hi Ezra,

I don't know where I've been all this time, but I love reading someone serious about welfare. In graduate school I did a policy analysis on the proposed "pre-school for all" initiative in California. One thing I found is that pre-school/day care is the number one expense for two-earner families, and that in my county (Santa Clara, where it's damned difficult to have a single-earner family unless you're in certain well-paid professions), employers account for only 1% of the outlays for pre-school/day care costs. The state and federal government, it turns out, are actually pretty generous in this regard; though don't get me started on the entirely different topic of the actual effectiveness of pre-school/day care. I think the Denmark model makes a great case for the employment re-training model of welfare reform. It's interesting to note that welfare reform as originally envisioned by Bill Clinton and his staff included far more subsidies for day care and re-training than the final bill.

Best,

James

Posted by: James F. Elliott | Jan 2, 2007 1:40:01 PM

© 2007 Mark Robert Gates

Isn't, that nice. While these people are championing Denmarks, economic policies, of inside, outsourcing of low pay service workers, we are strangling ours, in an effort to get rid of them.

See: In an economy where they have imported low income service workers, fill those positions, life works.

-Mark Robert Gates

please my blogs:

http://lokieponaphoenix.blogspot.com/
http://wellnessempowered.blogspot.com/

Posted by: Mark Robert Gates | Jan 3, 2007 2:08:18 AM

Interesting post. Basically it points up two issues:

1) States variation and independence is just another myth of the USA these days. Probably best filed along with checks and balances and a "region based" Senate as ideas which were overwhelmed by history and somehow no-one noticed.

2) Absolutely the US should be open to trying these things, but somehow, it isn't. The amusing part is that the "Washington Consensus" is exported around the globe with a straight face. The workings of the largest economy on Earth are supposed to provide a template for small and medium sized countries with very different geography, history and natural resource issues. But when someone says the US has something to learn from Denmark? Oh, they are small, they have cohesion, the example is too skewed to teach us anything...

Posted by: Meh | Jan 3, 2007 1:44:37 PM

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Posted by: judy | Sep 26, 2007 10:09:59 AM

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