The Almost Nearly Perfect People

by Michael Booth

  ‘That’s over 80 per cent,’ marvelled Tranæs when I met him in his office in central Copenhagen. ‘Almost everyone! But it’s not a double standard. I call it “advanced morals”. People believe that, because they do a job and pay their income tax, then it is okay to come home and [if they are a plumber] help their neighbour fix their sink and get 100 kroner.’

  Ove Kaj Pedersen of the Copenhagen Business School was surprisingly relaxed about the Danish black market. ‘We have a very specific type of black market, which to some extent is known about and allowed. If we wanted to get rid of it we could very easily, but you would destroy probably the basic part of the private service sector because they couldn’t survive. And the private service sector is the biggest problem in Denmark at the moment because it is made up of very small companies, five to seven employees, no more than twenty people, and you could easily destroy them by wiping out the black market’ [76 per cent of Danish companies have fewer than nineteen employees].

  In other words, the politicians turn a blind eye to public sector workers’ and benefit claimants’ tax-dodging for the greater good of the Danish private sector, which in turn is paying those public sector workers’ salaries or claimants’ benefits. It is a very pragmatic, actually very Scandinavian solution of a kind which can also be seen in Sweden, Norway and Finland.

  The second curious anomaly about these supposedly careful, parsimonious Lutheran Danes is their gargantuan, world-leading private debt levels. Though Denmark’s national debt is relatively modest at half the EU average, according to a recent IMF warning, the Danish people have personally indebted themselves up to their Gucci glasses. Today, Danish households have the highest ratio of debt-to-income of any country in the Western world: the Danes owe, on average, 310 per cent of their annual income, more than double that of the Portuguese or Spanish, and quadruple that of the Italians. An astonishing figure, yet something rarely discussed in the Danish media or at Danish dining tables. And, of course, this doesn’t stop the Danes from sucking their teeth at those devious, lazy, ‘live for today’ Southern Europeans.

  The Danes’ debt levels are partly a result of the former Venstre party government’s introduction of calamitous interest-only mortgages in 2003.2 This helped fuel a property boom over the following couple of years that saw the value of some properties rise by as much as 1,200 per cent; many home-owners borrowed large amounts against their newly released equity. (Today over half of all home loans are of this ‘never-never’ variety.) This was all fine as long as the value of the properties continued to soar, but then came the inevitable bust; house prices plummeted from 2008 onwards, leaving many with negative equity. Today, just about the only people in Denmark who are solvent are the pensioners who paid off their mortgages before the interest-free loans were introduced; the massively indebted thirty-to forty-year-olds are, I believe the correct economic term is, ‘screwed’, not least because the Danes’ productivity has never come even remotely close to keeping up with their spending. Something, eventually, has to give.

  Perhaps more worrying than their debt is that fact that the Danes are as reluctant to save as they are enthusiastic about borrowing: a deadly combination. ‘Why should you save if everything is paid for by the State? I pay all this tax money, so I don’t have to save,’ is how Ove Kaj Pedersen explained the Danes’ approach to saving. His compatriots save the least of any Western nation: 1 per cent of their annual income compared with the 5.7 per cent average in other Western countries. Still, Pedersen seems unperturbed: ‘The Danes have the biggest pension funds in the world, so the pensions are guaranteed. It doesn’t bother me because the debt is covered by that saving. It is a problem but it has no influence on the next generation, not like in Greece or the US.’

  As I left Pedersen’s office, and walked down his leafy Frederiksberg street lined with grand villas, a thought struck me. Could the Danes’ ‘live for today’ approach to saving and borrowing actually be another facet of their happiness? To an economist, or even a financial retard such as myself, their approach to borrowing and spending appears near-suicidal, but will the Danes have the last laugh regardless? You can’t take your money with you, as they say, but neither do your debts accompany you to the afterlife. The Danes certainly have a carefree approach to living in the red but might they actually be the ones with the right attitude to their banks’ money? It’s not as if the banks have been paragons of probity these last few years, so why should their customers behave any differently?

  Still, it is a paradox that, while the Danes claim that they gladly give their cash to the government with one hand, the other is either online applying to borrow more to pay for their nice German cars, Bang & Olufsen TVs and occasional holidays to Phuket, or slipping a bulging brown envelope to a Polish builder.

  It turns out that they have a track record here. In 1694 the English ambassador to Copenhagen, Robert Molesworth, wrote in his memoir An Account of Denmark:

  Denmark is a country which is plagued by terribly high taxes. The result is that everyone does what they can to cheat on their taxes . . . From the whole I conclude that there is a moral Impossibility all these Taxes and Impositions should continue. The weight of them is already so great that the Natives have reason rather to wish for, than defend their Country from an Invader; because they have little or no Property to lose.

  It seems the Danes are behaving to type every bit as much as the Greeks, yet somehow their image remains untarnished. And for that, at least, you have to admire them.

  * * *

  1 In Danish, the word for tax (skat) also means ‘treasure’ and ‘darling’. Meanwhile, the word for poison (gift) also means ‘married’. After all these years, I still do not really know what to make of this.

  2 Confusingly, Venstre translates as ‘left’, but this is in fact Denmark’s centre right party, the rough equivalent of the Conservatives.

  Chapter 8

  Hot-tub sandwiches

  IT IS ODD, isn’t it, that a nation of people famed for their laid-back approach to life, for being moderate and concensus-driven, so relaxed and easy going, are in fact such economic extremists: welfare state extremists, borrowing and debt extremists, tax extremists, (low) working hours extremists, and so on.

  One would assume that the country with the highest tax rates, some of the highest public-sector spending in the world, and a welfare state which has grown at a rate of about 2 per cent every year for the last three or four decades, would have equally exceptional public services, the best hospitals, the best transport system and the best schools, right? As well as being the happiest people in the world, the Danes should also score at the top – or at least very highly – in these more tangible, statistically verifiable fields, no?

  But cold statistics don’t always cast Denmark in such a glowing light. In general terms, the United Nations Human Development Index, which assesses how developed a nation is based on such things as life expectancy, literacy and gross national income per capita, places Denmark in sixteenth place, below countries like Ireland and South Korea and all the other Nordic countries save for Finland.

  More specifically, the Programme for International Student Assessment (PISA), the most widely accepted international ranking list for school standards, takes a particularly dim view of Denmark’s education system. Its most recent report, in 2009, placed Denmark in the bottom third of the top 30 countries in most of the key categories, below even Britain in the sciences, which is really saying something (in contrast to Finland which is invariably at, or near, the top).

  ‘Who cares?’ said Ove Kaj Pedersen when I put Denmark’s poor PISA performance to him. ‘PISA is measuring something that doesn’t really count in the Danish situation. If you take our social skills, the way of collaborating, empathy, the ability to work in teams, Denmark comes in number one.’ Pedersen – who I think it’s fair to say might have a bit of an agenda, having been chairman of the board of education in Denmark for many years – pointed out that in modern Denmark, with its pr
ofusion of small or medium companies with their flat hierarchies, these social skills were far more important than high scores in ‘the three Rs’.

  Shortly after Pedersen and I spoke, some or other Danish university published a report rubbishing PISA’s methodology. It simply wasn’t true that Danish children drastically under-performed compared with the rest of the world, it claimed. PISA hadn’t done its sums properly. Unfortunately, shortly after that, Danmarks Radio – the Danish equivalent of the BBC – screened a fascinating four-part documentary series comparing a Danish class of sixteen-year-olds with a Chinese class of the same age in four categories: maths, creativity, social skills and English. I think it’s fair to say that most Danes would have expected the Chinese students to do better in maths, but for the Danish children to have better social and creativity skills, and be better at English. As it turned out, the series sent major shockwaves through the Danish education system, the viewing public and the government when the Danish kids were roundly bested by the Chinese in the first three categories. Only in their English skills were the Danes superior. (None of this helped the Danish teaching unions who, at the time, were arguing against increasing the number of hours spent teaching, despite the fact that they spent fewer hours actually teaching than teachers everywhere else in Europe. They lost that argument.)

  My own, fairly limited, experience of Danish public services has been patchy over the years. In terms of the Danish health service, the birth of one son was a state-of-the art experience with a fabulous midwife, a hot tub and sandwiches; the birth of the other was borderline third-world, with uninterested midwives mooching in and out of the delivery room as if they were checking on gently simmering stew, and a bit of a panic at the end. Other than that, I have no great first-hand knowledge and only anecdotal reports which range from high praise to terrifying tales of incompetence – in other words, pretty much just like any other national health service.

  Actually, I did have one telling experience recently, which relates to the significant cuts to provincial Danish health services. My youngest son had something in one of his eyes, so we took ourselves off to the nearest accident and emergency department, which was about thirty miles away. The waiting room was packed and I led my son, who was holding his hands over both his eyes for emphasis, to the only free seat beside a fantastically obese, tattooed family who had brought their equally barrel-shaped dachshund along for the trip (‘Is obesity an emergency?’ I wondered idly as I queued at reception. In their case, I decided it probably was.)

  When I finally reached the end of the queue I was told that a doctor would not be able to see my son as I had not made an appointment. This was a new one on me: an appointment for an emergency? It was a recent cost-cutting measure, the receptionist sighed, designed to streamline the system.

  ‘Oh, sorry! Next time I’ll be sure to ring ahead, before anyone injures themselves,’ I chirruped politely, as I led my blinded son from the premises.

  Equally surprising, given the proportion of their wages they hand over for such services, Danish people have to pay for visits to the dentist and the optician, as well as for their prescription medicines (which are more expensive than they are in the UK). They also have to pay most of their physiotherapy and psychology costs – both of which are free in the UK. Even the ambulance service is privatised. Perhaps it is a result of all this that the Danes are very much the unhealthy sibling in the Nordic family with, as we’ve seen, the highest rates of cancer, the lowest life expectancy (78.4 years), and among the highest levels of alcohol consumption in Europe. They would also appear to be addicted to sugar, consuming more sweets per capita than anyone else in the world (7.81kg per year). They are also, perhaps less surprisingly, the largest consumers of processed pork products in the world, a subject about which there have been several health warnings in recent years (according to one source I found, the Danes eat 65kg each of dead pig per year). They have also proved reluctant to wean themselves off their nicotine habits, largely, I suspect, because they have an important tobacco industry, along with a much-loved, and long-lived, queen who is a prominent smoker. Smoking was only banned in Danish schools in 2007.

  As for the Danish education system, obviously I did not pass through it myself, but my children are doing so at the moment. Initially, they attended a folkeskole, or state school. The Danish state’s folkeskoler, which date back to the early 1800s, are a key element of their national identity, not to mention their enduring equality. As Villy Søvndal, the former leader of the Socialist People’s Party, once put it: ‘The folkeskole is the best example of a genius institution which gathers children from different social levels and, in doing so, binds our society together.’ It is rare that I find myself agreeing with Søvndal (a supposedly old-school lefty whose principles were promptly discarded the moment he got his ministerial limo) but he is right when he says that the folkeskoler are a key element in fostering Denmark’s social cohesion. But, as with the British comprehensive system, there is a growing concern that the schools tend to sacrifice the potential achievements of the higher-performing students for the better good of the middle and lower achievers: the level of instruction is brought down to include the least able, testing is frowned upon, and, though I realise I sound like a reactionary old fart when I say this, there does seem to be a little too much emphasis on social skills at the expense of actual learning.

  We ended up moving our children to a privatskole where there was more emphasis on things like stopping the children from hitting each other over the head with chairs. (I should point out, Denmark’s private schools receive financial support from the state, with parents paying top-up fees amounting to a fraction of those of the British private sector.

  The more I thought about the often parlous state of Danish public services – the rail system, which is virtually bankrupt, the underperforming hospitals, the almost comedically poor schools – I began to wonder whether the reason the Danes still feel they are getting value for their tax kroner is because they don’t actually have all that clear an idea of where their taxes are being spent. A while ago a member of parliament for the Liberal Alliance (the right-wing, liberal economic party) suggested that all public spending should be detailed on individuals’ tax returns so that Danes could see how much of their tax money went on education, how much on defence, and so on. This doesn’t seem too revolutionary an idea to me, yet, perhaps unsurprisingly, there was an outcry in parliament and the proposal died a death. But would it be such a bad idea? Where is all that tax money going?

  ‘Activation of the unemployed is around DKK20 billion. We have a fairly expensive childcare system, and then of course there are the transfer payments,’ said Martin Ågerup, referring to the hundreds of millions of kroner spent on pensions, unemployment and sickness benefits, child and housing support, and student grants. A million Danes receive housing benefit, he said, and the pensions pot is essentially bottomless.

  If I can return to my choir metaphor for a moment, as I discovered during the twiddly bits of ‘Bohemian Rhapsody’, when you are but one singer in a choir of hundreds, it is really quite easy to contribute nothing yet remain part of the group. Switch off and mouth the words and no one will call you out because they are too busy concentrating on how they are sounding. It is easy to coast.

  There is a growing feeling that too many Danes have been doing just that for too many years. The most high-profile case in the media recently concerned ‘Dovne Robert’ (Lazy Robert), a well-educated, physically able man in his thirties who has been signing on for the dole for over eleven years, playing the system like a maestro with his Stradivarius. There was a predictable outcry, which does seem to have moved the debate forward a little, but Robert now makes a nice living as a media figure so is, essentially, still unemployed.

  Surely Denmark is going to have to bite the bullet and endure the kind of far-reaching and controversial reforms the Swedes were forced to implement following their banking crisis of the early nineties, and from which they emerg
ed by far the stronger economy. The Danish public sector and tax levels cannot continue to grow. As is happening throughout the Western world, its population is aging, the working-age population is diminishing, and the birth rate is at a twenty-year low. The only question is, which politician or political party is going to have the cojones to take what will be hugely unpopular, but necessary, decisions?

  The Danes, it seems, have some very difficult choices ahead, choices which could have direct consequences not just for their long-term economic stability, but also for their much-vaunted happiness. Or do they? Perhaps the rampantly individualistic, child-of-Thatcher, ‘greed is good’ atmosphere prevalent in Britain during my childhood has blinkered me to the collectivist benefits of a society such as Denmark’s. After all, who has greater poverty, more crime, greater inequality and Jeremy Kyle – the Danes or the British? Who is the happier? It was time to hear the argument for the Danish model, from one of its most prominent proponents.

  Chapter 9

  The bumblebee

  IT ALL LOOKS so very familiar, but I can’t quite put my finger on why. I have never been inside Christiansborg Palace, the Danish parliament building, before, yet I am experiencing an almost overwhelming sense of déjà vu.

  I have arrived early in the morning and made my way, untroubled, past the virtually non-existent security system. Something on my person sets off a metal detector, but there is no one here to stop me, so I continue through to reception. It all seems remarkably relaxed for a country that has experienced a number of terrorist threats, and actual attacks, in recent years.

  After a lengthy wait in a windowless holding pen – during which things get so boring I have plenty of time to ponder why the Danish welcome sign, Velkommen til Folketinget, does not have an exclamation mark, but the English translation ‘Welcome to the Danish Parliament!’ does – a tall women in a smart suit arrives and I follow her up a broad, palatial flight of steps and along some imposing corridors before, finally, I am shown into a high-ceilinged office the size of half a football pitch, furnished with classic Danish chairs and tables, and large abstract oil paintings.