Why is Bernie Talking About Denmark?

john campbellJohn L. Campbell 
Dartmouth College

Bernie Sanders, candidate for the Democratic Party nomination for President, frequently mentions Denmark as a country America could learn a lot from. Nowhere is this lesson needed more than among the current crop of Republicans seeking their party’s nomination for President and who have called for all sorts of federal tax and spending cuts, arguing that this is necessary to enhance America’s economic competitiveness in the global economy. Really?

Comparisons abound between the two countries but when it comes to competitiveness, the picture is remarkably similar. According to the World Economic Forum’s most recent Global Competitiveness Report, both the United States and Denmark are among the most competitive economies in the world. The United States ranks third while Denmark is tied for sixth. In the WEF’s view, the big difference that puts America ahead of Denmark is the sheer size of America’s market, which significantly dwarfs Denmark’s. Denmark, after all, is a small country of only about 5.6 million people—and there isn’t anything that lower taxes and spending can do to change that.

Quality of life is also very good in these two countries. According to the WEF, GDP per capita in Denmark is about $59,000 while in America it’s $53,000. And last year Denmark ranked third on the U.N. Human Development Index, which reflects average life expectancy, literacy, and education among other things. The United States was eighth.

Beyond this, however, the similarities end, which is why the Republicans could learn a lot from Denmark. Indeed, these two countries’ paths to economic success could not be more different. High taxes and government spending on social programs—anathema to the Republicans—make Denmark one of the world’s most generous welfare states, but contrary to conservative dogma, the result is not stagnation, but a thriving economy with a booming private sector.

The OECD reports that while Washington spent about 38 percent of GDP in 2014, the Danes spent 56 percent. And Danish expenditures on social programs were a third larger than they were in America.

When it comes to taxes the differences are even more startling. In 2012, the most recent year reported by the OECD, total tax revenue in the United States amounted to about 24 percent of GDP whereas in Denmark it was twice that size. More to the point, taxes on income and profits, about which Republicans complain constantly, were three times higher in Denmark than America.

All of this should shock those Americans who fervently believe that high taxes and government spending drive firms away, undermine investment, and jeopardize economic growth, jobs, and national prosperity. By this logic, Denmark’s economy should be in the toilet!

But it is not. And in one important respect the Danes have beaten us hands down. In addition to remaining economically competitive, they have done it by minimizing poverty and income inequality. According to the OECD, the poverty rate in the United States is nearly twice as large as in Denmark. Income inequality (after taxes and government transfers) is roughly a third higher in the United States than in Denmark.

So how do the Danes do it? By spending tax revenue on things that boost national economic competitiveness and reduce inequality and poverty. For example, Danes receive publicly financed education through college and often graduate school. They also have a publicly financed national apprenticeship program for students not going to college. The result is one of the world’s most highly skilled labor forces. Danes also enjoy a publicly financed health care system that is less expensive and more effective than our own—and that automatically covers all Danish citizens. In turn, firms operating in Denmark benefit from smart, healthy workers and are not saddled with the exorbitant costs of health insurance as are U.S. firms.

Not only have these sorts of benefits enhanced the competitiveness of Danish employers, they have also proven attractive to foreign firms. The director of European operations for one of the world’s largest software manufacturing companies told one of my Danish colleagues that these were the sorts of things that caused his firm to put its European headquarters in Copenhagen. He added that high taxes were not even a consideration.

The lesson for Republicans as well as many Democrats is that there is more than one way to skin a cat. Tax and spending cuts are not a panacea. In fact, increasing taxes would provide revenues that could be used in constructive ways. Raising taxes and providing services could also help America reduce inequality and poverty. As Bernie knows, the lesson of Denmark is that doing so does not have to hurt U.S. economic competitiveness in the global economy.


John L. Campbell is the Class of 1925 Professor of Sociology at Dartmouth College and Professor of Political Economy at the Copenhagen Business School. His most recent books are The National Origins of Policy Ideas: Knowledge Regimes in the United States, France, Germany and Denmark (Princeton University Press, 2014), and The World of States (Bloomsbury Press, 2015).

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10 thoughts on “Why is Bernie Talking About Denmark?

  1. Totally agree with the gist of your comments, John. Well argued. I often wonder how Republicans who actually visit places like Denmark reconcile their ideas with the reality laid out before them.
    I do have to disagree with you about one thing, however: You embrace “national economic competiveness” as an analytically useful concept. Personally, I think this is dangerous (to echo a famous 1994 essay by Paul Krugman). To me, this is simply a folk concept based on the lived experience of businesspeople. Serious academic economists don’t believe in it, and I don’t see why sociologists should either. Yes, the term is used a lot in public debates; but I think we need to be careful about embracing pop concepts when doing so has implications for the very terms of a debate, and I find that “competitiveness” implies (wrongly) that countries should be understood like corporations.

    1. Malcolm offers an interesting comment worth further consideration. I don’t know if “national competitiveness” implies that countries should be viewed as corporations–I certainly don’t assume that. In any case, the concept is common among policymakers, politicians and others having been touted, for instance, by the OECD, IMF and other influential organizations for several years. (See Pedersen’s essay in The Oxford Handbook of Comparative Institutional Analysis, 2010). So using it should help catch people’s attention and help frame arguments like mine as well as some of the other responses to my initial post.

  2. Thank you Prof. Campbell for opening an excellent debate with clear concise thoughts, facts and insight.

    I wonder whether the quoted percent of GDP spent by the two countries is an equivalent comparison – do we have apples and oranges? How are the expenditures at state, county/parrish, and city levels in the US handled in this comparison? What is the true total, consolidated government expenditure in the US as a percent of GDP? Does Denmark have a similar percent of GDP dedicated to worldwide military and foreign aid as the US?

    Also, Denmark is not a major competitor either directly nor as a destination for US business headquarters. As evidenced by the recent announcements by Pfizer, relocation of a business, and thereby the reported and taxable corporate income, is not likely to bring more business to Denmark from the US. Yet the higher business taxes in the US relative to other industrialized western nations has led to both failure to repatriate overseas profits and numerous headquarter relocations for several decades. This conclusion is not based on an anecdotal observation but broad scale facts over the years.

    While the advantages of widespread benefits such as universal healthcare, tuition free education, etc. are quite clear, such high cost largess must be tempered with the reality of what the nation is willing to expend and how they are willing to allocate available funds. Let the debate continue!

    1. Two quick replies to Bill, and thanks for the comments. First, I invite you to check out the OECD website to see how they develop these statistics. Whether the GDP or other measures are equivalent as opposed to apples and oranges should be clear from that. Second, I don’t think the Danes view universal healthcare, tuition free education, etc. as “largess.” They view them as social rights. Moreover, some of what conservatives in the United States might consider largess, like unemployment insurance or job training programs, the Danes–both left and right–accept as entirely appropriate aspects of Keynesian-style automatic stabilizers.

  3. Overall I agree with John Campbell, but Bill Brigden brings up an important point when he mentions higher business taxes in the U.S.: it’s not the overall *level* of taxation that matters, but the *structure* of taxation. Here’s a table suggesting corporate tax rates have been higher in the U.S. than in Denmark:


    Of course, American companies don’t always *pay* those high business tax rates, finding or lobbying for loopholes to escape them. But if you’re a business choosing where to locate yourself, which do you prefer: a clear, relatively low tax rate as in Denmark; or a nominally high tax rate that you might or might not be able to get lower after a lot of lobbying effort, as in the U.S.?

    1. Monica raises a good point about why businesses decide to locate in one place or another. There is a wonderful book by Nathan Jensen (Nation-States and the Multinational Corporation: A Political Economy of Foreign Direct Investment) that takes a close look–statistically as well as through extensive interviews–at this and finds that taxes are far down the list of things that companies worry about when deciding what county to invest in. I think you’ll find something similar in the World Economic Forum statistics ranking countries in terms of competitiveness (oops! There’s Bill Brigden’s word again) and finding that many variables go into the mix.

      1. Layna Mosley has written on these issues as well. It’s a nuanced picture that she presents- market actors’ preferences about policies are not fixed. They prioritize one set of policies in advanced nations, and another set of policies in emerging markets.

        In advanced nations, their investment decisions are not driven by supply-side or micro-level policies. This is based on survey data, by the way.

  4. I really enjoyed reading this. Similar comparisons were made by Lane Kenworthy.



    And by Jonas Pontusson.

    The claim that federal tax and spending cuts will enhance economic competitiveness is not backed up by empirical data. There is ample evidence, however, that tax and spending cuts would lead to increased inequality.

  5. Sorry to come to this interesting discussion so late.

    Yes, social democracy might be very nice, but is Denmark in all of its aspects really something we want to emulate? As Hugh Eakin points out in the newest issue of the New York Review of Books (http://www.nybooks.com/articles/2016/03/10/liberal-harsh-denmark/), Denmark, while very egalitarian and inclusive with respect to native Danes, is incredibly harsh with respect to refugees and immigrants. Trump-like demagogues are doing fine there (and in many of the other social democracies of Europe – Marine Le Pen might become France’s next president).

    Is it perhaps the case that social democracy was able to develop there only because of perceived social homogeneity? I seem to recall arguments that social provisions (for example in 1950s California) used to be stronger here when they could be defined or presented as for native whites only; once benefits got extended to what were perceived as socially Other, support rapidly dropped. Is that supported by recent research? If so, how can we build a social democracy while maintaining a diverse, multicultural society?

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