The Almost Nearly Perfect People

by Michael Booth

  And who are the Rotten Bananas? This is a recent media term used to describe a great, crescent-shaped swathe of the country which is plagued by high unemployment, low wages, crumbling infrastructure, poor health care and underperforming schools. It runs from northern Jutland south along the west coast, before curving east across the island of Funen and ending with the southern islands of Lolland and Falster. Also referred to as udkantsdanmark (‘outlying’, or ‘peripheral’ Denmark; the hinterland), the Banana is mostly rural and actually encompasses the majority of Denmark’s land mass, bar its two main cities – Copenhagen and Aarhus – and North Zealand.

  These Danish provinces are dying a slow death caused by a constant flow of the young and the educated towards the cities, and of the unemployed and the elderly in the other direction. It is a decline which successive governments have failed to stem, despite throwing disproportionate amounts of public money at the problem.

  ‘Yes, I do see differences,’ conceded Pedersen, when I brought this up. ‘But these are not dramatic ones. I have lived in Manhattan, I travel to Beijing and everywhere else. We aren’t that poor. They will never lack anything to eat. In Denmark poverty is a lack of two televisions!’

  But I wasn’t so sure. The often striking imbalance in employment opportunities, transport provision, public services, cultural offerings and, well, just nice stuff to see and do between Copenhagen and the rest of the country seemed self-evidently unhealthy.

  There are also fears that, in terms of both healthcare and education, Denmark is becoming a two-tier country. More and more Danes who can afford it are turning to private healthcare – 850,000 at the latest count – and poll after poll show that, though they have the largest per capita public sector in the world, the Danes’ satisfaction levels with their welfare state are in rapid decline. It is probably true that they have especially high expectations given the amount of money they contribute to it, but in one survey by management consultants Accenture only 22 per cent of Danes thought their public sector did a good job.

  Looking to the future, of greatest concern is the gulf that exists in school performance depending on whereabouts in the country you are educated. A recent survey carried out by Politiken revealed that students at Ishøj Gymnasium (‘gymnasium’ is the name the Danes give their secondary schools), in a predominantly working-class and immigrant area south of Copenhagen, scored an average of just 5.4 out of 12, compared with 7.7 in one school in the more affluent North Zealand. (The national average is 6.9).2 This imbalance of educational opportunity strikes at the very heart of Denmark’s future equality.

  Denmark is not alone in this trend. Finland faces similar challenges, and urban migration has been even more starkly felt in Sweden where almost 40 per cent of the population now lives in the three main cities – Gothenburg, Malmö and Stockholm. These days, large areas of northern Sweden are depopulated, derelict and largely devoid of any civic presence. There are two reasons for this: firstly, Sweden is a much less densely populated country (it has over ten times the land mass of Denmark but less than twice the population), and secondly, the drive towards industrialisation has been far stronger in Sweden over the last hundred years. Only Norway seems to have bucked the trend, its colossal oil wealth and a long tradition of decentralisation from Oslo – the right to receive a variety of services wherever you live in the country is enshrined in law – have helped keep its provinces relatively well populated and with reasonable infrastructure.

  ‘We should have it easier because we are such a small country, but it isn’t small in our heads,’ Torben Tranæs, head of the Rockwool Research Foundation, an independent social research body (funded, bizarrely, by an insulation manufacturer), told me when I met him in his Copenhagen office. He believes that a lack of labour-force mobility lies at the heart of Denmark’s provincial problem. Ironically, for this enthusiastic cycling nation, the Danes do not like to get on their bikes – in the Tebbitian sense – to look for work.

  ‘There’s lots of talk in the media about how young people can’t get apprenticeships, but then you discover that companies can’t actually get enough young people to come and work for them because the companies aren’t located in Copenhagen or a big city,’ Torben explained. ‘There are a lot of people around the world who would give their right arm for a job at Danfoss [a manufacturer of thermostats located in a not terribly exciting part of Jutland] but you hear many young people talk as if it is extremely unjust that they be required to move away to get a job. It also works like that with professors – you would rather stick with an associate professor post in Copenhagen than take a professorship in Aarhus. I think that’s terrible. It is a real challenge to make sure that there is a modern standard of jobs and welfare all around Denmark.’ Christian Bjørnskov agreed: ‘You have these areas where no one works. People won’t move to get work. I grew up in south-west Jutland and it is a major problem getting doctors to move there. Danes are not mobile.’

  It is true that the Danes are not the most adventurous of people. Some might backpack around South-East Asia or South America in their twenties, but they tend to stick closer to home thereafter. As we’ve seen with the annual summer-house exodus, many are quite happy to go on holiday an hour away. Come July they clamber aboard their Citroën Berlingos and head to their wooden houses on the coast, and that’ll do them. There is the sense that the world exists within a tankful of petrol and there is no need to venture any further.

  ‘I don’t think it’s possible to change. Urbanisation has happened everywhere industrialisation happens,’ Martin Ågerup, head of the centre-right think tank CEPOS told me when I met him in his office in Frederiksstaden, central Copenhagen. ‘Nowhere in the world is the trend going the other way. People want to live in cities, they want to move from the countryside close to cities. You want to stop that or reverse it? Well, the costs of that are quite high and I don’t think they are worth paying.’

  Ågerup was not the only Dane I met who was also prepared to go on record as saying he would be happy to see further increases in economic inequality in his homeland. Another who shares his view is the Danish People’s Party’s EU parliament member, Morten Messerschmidt, one of the country’s most polarising right-wing politicians (frankly, he’s loathsome), who has spoken out against ‘equality fascism’ and what he sees as the blinkered ideological drive for an equal society.

  Ågerup is not nearly as extreme as Messerschmidt, but as we were talking I looked over his shoulder and caught sight of a photograph on the wall of his office. In it he beamed proudly as he stood beside a familiar woman in a blue dress. It was Margaret Thatcher.

  ‘So Martin,’ I said, turning back to my interviewee. ‘Let’s talk about tax.’

  * * *

  1 This calls to mind a famous Milton Friedman anecdote. ‘In Sweden we have no poverty,’ a Swedish left-winger had boasted to him. Friedman, no enthusiast for state-imposed equality, replied, ‘That’s interesting, because in America, among Swedes, we have no poverty either,’ the inference being that the success of Swedish immigrants to the States was cultural or genetic and nothing to do with Sweden’s social democratic policies. What Friedman conveniently ignored, of course, was the disposition of those Swedes who left Sweden in the nineteenth century, who were, by definition, notable self-starters, which presumably muddies things somewhat.

  2 Oddly, and for reasons which no one has ever been able to explain sufficiently to me, the ‘7-step’ Danish school-marking system runs from -3 to 00 (non-passing levels), then 02, 4, 7, 10 and finally 12 as the top score.

  Chapter 7

  72 per cent

  IF YOU WANTED to sum up each of the Nordic lands in a single statistic, one peremptory and reductive yet insightful factoid, what would they be? In Iceland, it would probably be the size of the population, which tells you just about everything you need to know about the windswept and frozen island’s appeal over the centuries as well as providing a fairly strong clue about how the financial misadventures of recent year
s came to pass. In Finland my gateway fact would be a list of the three most popular prescription drugs (no skipping ahead). In Sweden it is probably the size of its immigrant population; in Norway, the gargantuan size of its oil-revenue wealth fund.

  Denmark’s defining statistic has to be its tax rate. The Danes have the highest tax rates in the world, both direct and indirect. They pay the most for the goods in their shops (42 per cent more than the European average – more even, in some cases, than the Norwegians), the most for their cars, the most for their meals in restaurants (up to 150 per cent more), and it is all because of their taxes. In Denmark, books are luxury goods. And don’t get me started on the cost of decent cheese.

  How does the Danish government get its hand on the electorate’s money? Let us count the ways.

  There is income tax, for a start, which ranges from a base rate of 42 per cent (in the UK it is 20 per cent) up to the top level of 56 per cent.

  On top of that is a ‘church tax’ of a little over 1 per cent (it is optional, but the majority pay it because it’s a bother opting out), and something called ambi (arbejdesmarkedsbidrag). I have yet to fully understand what ambi actually is or whose pocket it goes into, but together they bring the top level of direct tax up to as good as 60 per cent.

  If you own your home you can probably wave goodbye to around 5 per cent of what’s left to property taxes. According to a recent report by Deloitte, if you take into account loan costs, water rates, heating, repairs, and so on, the Danes pay 70 per cent more for the cost of owning a home than the European average. If they use electricity, the government adds 76.5 per cent to the bill.

  If you buy a new car you can count on adding 180 per cent on top of the car’s purchase price (which is why mine is fifteen years old and smells funny). Petrol (75 per cent) and road taxes (around £600 per year) are also among the highest in the world.

  VAT (called ‘MOMS’ in Denmark) is 25 per cent and levied on everything you buy, including food and children’s books, although not newspapers.

  And they haven’t stopped there. A couple of years ago the government attempted to introduce a ‘fat tax’ on products like bacon and butter that it deemed deleterious to its citizens’ health. Unfortunately, many Danes simply drove to Germany and Sweden to buy such products, and the tax was repealed. Meanwhile, though Denmark’s magnificent road and rail bridges to east Sweden and between the Danish islands of Zealand and Funen were paid for long ago, there is still a charge to cross them of almost £30, one-way, which is a kind of tax in itself.

  Thus the total direct and indirect burden on the Danish tax payer ranges from 58–72 per cent. Put another way, the Danes are allowed to decide the fate of one-third of the money they earn. Put it yet another way: in Denmark, even if you work in the private sector, you work for the state up until at least Thursday morning.1

  And, in case you are wondering, Danish wages are not correspondingly excessive: the country ranks sixth in the OECD’s most recent figures for gross income, behind the likes of Ireland and the US; it’s not as if the Danes aren’t feeling the pinch when they count what’s left at the end of the month.

  So you can see why the Danish economic liberalists feel they have a case for tax reductions. Except for one really strange thing: no one else really complains about the taxes in Denmark. They do whinge a little, but when it comes down to actually doing something about it and changing the tax rates, the Danes have been remarkably reluctant to vote in favour. Denmark has seen anti-taxation political parties come and go since the early 1970s, yet none of them has achieved any lasting success based on that manifesto. Currently, tax reduction is the Liberal Alliance party’s battle cry, and they won a measly 5 per cent of the vote at the last election. I can think of several countries where the politicians would end up with their heads on pikes if they tried to nab 60–70 per cent of their electorate’s income, but the Danes are remarkably chilled about the amount they pay in tax. They might roll their eyes a little when the subject is raised, and perhaps indicate with a shrug or one raised eyebrow that they wouldn’t be averse to rates dropping, just a little, but only as long as the sick and unemployed are still cared for, the hospitals and schools have adequate funding, and the all-important safety net remains in place.

  ‘It is true,’ centre-right think-tanker Martin Ågerup conceded with a sigh when I put this to him. ‘Lower taxes have not been the great vote-winner that you would expect of the country with the highest taxes in the world.’ For many Danes, their tax burden seems to be the ultimate symbol of collective sacrifice.

  As well as being the editor of Weekendavisen, Anne Knudsen – who kindly filled us in on the timeline of Danishness earlier – is a trained anthropologist. She has spent many years studying what makes Danes tick, with a particular interest in their welfare state. She expressed her concerns about the size of Denmark’s public sector to me, and had a theory about the Danes’ relationship to their tax burden.

  ‘It is a matter of pride to say, “I pay a lot of taxes,”’ she told me. ‘It’s a status gesture, like giving alms. It is why you get 30 per cent of people who live in Østerbro [home to Copenhagen’s bourgeois bohemians] voting for Enhedslisten [Denmark’s most left-wing mainstream party].’

  This chimes with a fascinating theory expounded by a Danish friend of mine, the science writer Tor Nørretranders. In his 2005 book The Generous Man, Nørretranders explains how demonstrations of altruism or displays of excess among both animals and humans are driven by an evolutionary imperative: the peacock shows how strong it is by displaying its burdensome excess of plumage; the hedge-fund manager demonstrates how successful he is by frittering a preposterous amount of money on a Bentley. Perhaps, in their way, the Danes are showing the rest of the world, and each other, how much of an overskud – that useful Danish word for a surplus or excess – they have by paying their exceedingly high taxes, and gladly. ‘This is how successful I am,’ the Danes are saying. ‘This is how successful our society is – 72 per cent is no problem for a wealthy, high-achieving people such as us.’

  Well that’s one theory, but are the Danes really as selfless and altruistic as that? Are they really getting value for their tax kroners, or are they the victims of a crafty political sleight of hand?

  In their 1980 free-market opus Free to Choose, Milton and Rose Friedman detailed the four ways in which money can be spent in what they saw as a descending order of fiscal responsibility:

  You spend your money on yourself.

  You spend your money on other people.

  You spend other people’s money on yourself.

  You spend other people’s money on other people.

  The clear implication was that, the closer you got to the fourth model, the more irresponsible the spending would be, but – not for the first time – the Danes disagree with the Friedmans. The Danes’ willingness to hand over great chunks of their earnings for the good of society would appear to imply two forces at work.

  The first is that the Danes trust that their government will spend their money wisely. ‘The explanation of the Danes’ willingness to pay tax is not that we are an especially unselfish people,’ Professor Christoffer Green-Pedersen of Aarhus University told a Danish newspaper recently. ‘But that they feel that they are getting something of value in return – for example, well-functioning schools and hospitals. Tax is seen as a price worth paying.’

  The second explanation is that the Danes are tremendously publicly spirited people who think only of the next incubator or school computer as they toil at their respective coalfaces. Certainly, poll after poll show that, in the eventuality of a government surplus, most Danes would rather see it spent on improving welfare than on tax cuts. And this, remember, in a country which, depending on where you go for your statistics, and how those statistics are compiled, already ranks between the highest and third-highest in the world in terms of public spend of GDP per capita (between 26 and 29 per cent).

  Perhaps the Danes somehow instinctively understand
the value to all levels of society of economic equality, as laid out in The Spirit Level. Or could there be another, more self-interested explanation for their contentment with their vast public sector? There is, I’m afraid. And it is a blindingly simple one.

  Over half of the Danish adult population – as much as two-thirds according to some estimates – either works in the public sector or is financially supported by it in the form of benefit payments. The idea, then, of the Danes voting for a reduction in the size of the public sector funded by tax cuts puts one in mind of that long-mooted turkeys vs Christmas referendum. The majority will always vote for the status quo because their livelihood depends on it. The Danish economy is, in essence, one giant circle jerk funded by a slowly decreasing, but increasingly beleaguered, private sector.

  As well as this, the Danes have a couple of other dirty little financial secrets they would probably rather the rest of the world didn’t know about that further cast their apparently saintly acceptance of high taxes in a more questionable light.

  The first is that the Danes are highly enthusiastic shoppers on the black market. Torben Tranæs’s Rockwool Foundation Research Unit recently published some headline-grabbing statistics regarding the black market in Denmark. According to its survey, more than 50 per cent of Danes reported purchasing goods or a service in the previous year without any tax being paid, while another 30 per cent admitted they would have liked to if only a decent offer had come their way.