The End of the Scandinavian Dream?
WHY YOU SHOULD CARE
Because if the Danes stop caring about equality, who will?
The tableau of want has become common enough in vast swaths of the postrecession West: An unwashed teenager lies on the steps of a church, sleeping. A woman nearby beseeches passersby for a few coins. Across the street, a clutch of homeless men are yelling at one another, looking combustible enough that well-to-do families quicken their pace as they walk by.
It just wasn’t supposed to happen here in Denmark, the world’s favorite socialist utopia.
Long a beacon for lefties around the globe, Denmark is losing its egalitarian luster. Poverty rates have doubled over the past decade, and inequality is on the rise: Since 2013, the wealthiest Danes have become 30 percent richer, and the poorest, 10 percent poorer, according to the OECD. Perhaps more remarkable? The Danish people, whose country tends to score top rankings on quality of life, are copacetic about it. In fact, with GDP growth stagnant or worse in recent years, there’s a growing acceptance among Danes of inequality as a necessary evil, says Kristian Weise, whose think tank, Cevea, recently published an exhaustive study on national inequality. The growing gap between rich and poor is not a fluke, he says, but “a matter of policy-making.”
A hundred meters down the street from the homeless shelter sits a trendy cafe where tourists sip overpriced cappuccinos.
Denmark’s cutting of social spending could lead other countries to follow suit; its preternatural ability to combine prosperity with a strong welfare state had made it an exemplar. But it’s not the only Scandinavian country losing its egalitarian grip. Take Nordic neighbor Finland: Last year, the government cut benefits to pensioners, the sick and the unemployed, prompting Finland’s Left Alliance to withdraw from the ruling coalition. In Norway, more than half the population would sacrifice some of their social welfare benefits for a stronger economy, according to the Oslo-based research foundation Fafo.
To be sure, Denmark’s poverty woes are still negligible compared to most of the world’s. The country’s Gini coefficient (the most accepted measure of inequality) is 25, still less than the EU average of 30.5 and far from the United States’ 40.8. Per capita income remains an enviable $60,000 or so, and the country’s generous benefits, from sizable student loans to socialized medicine, make it difficult to draw parallels with poverty-stricken Greece or Spain, with their dilapidated houses and soup-kitchen lines. Indeed, some argue that wealth inequality doesn’t matter so much in a state with such a strong social safety net — when the state guarantees university tuition and pensions, savings take less precedence.
But even that might be changing. With the economy still limping along after the 2008 crash, the left-wing opposition is conceding that it might be time to put equality on the back burner, says Weise. The idea here is that “economic growth will benefit from a little more inequality,” says Bo Sandemann Rasmussen, an economist at Denmark’s Aarhus University. The ruling right-wing party is in accord. “I do not think the current level of inequality is worrying,” says Karen Ellemann, the minister for social affairs and the interior. The more important problem, she says, is “creating equal opportunities for everybody.”
Still, inequality growth has led to some jarring juxtapositions, the kind that cut to the core of the so-called Scandinavian miracle. Copenhagen has no ghettos, just little pockets of destitution. A hundred meters down the street from the homeless shelter sits a trendy cafe where oblivious tourists sip oversize and overpriced cappuccinos. It’s a reminder that not everyone is being caught by the Danish social security net. Indeed, homelessness has grown by a quarter since 2013, according to the Danish National Centre for Social Research, to 6,138 people. Youth homelessness is rising the fastest: The last government cut incentives for job searching, leaving some trapped between a stagnant job market and escalating real-estate prices.
Left-wingers call for more aggressive taxes on wealth, including real estate and inheritance. But the current government prefers cutting benefits. “Equality is important, but entitlements should not take away the private initiative and strain the public budgets,” says a spokesperson for the Conservative party. So far the focus on growth over parity seems to be paying off. The right wing recently won the elections on the promise of tax cuts, and, according to the Danish statistics office, while inequality was growing, Denmark’s economy has been recording the longest streak of growth in 10 years.
It may be decades before most Danes experience the effects. But some experts say that equality as an afterthought is risky, because it’s not something that can be implemented retroactively, after the economy has grown. “The problem is that inequality is flying under the radar,” says Lars Benjaminsen, a researcher at the Danish National Centre of Social Research, “and when it surfaces, it will be too late.”