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Promising Economic Model in Denmark

Denmark is the birthplace of the classic fairytale, the Little Mermaid, but is also the home of an economic model that has given Denmark an edge over the vast majority of other Western economies, including the United States. According to Haekkerup, Denmark’s minister of trade and European affairs “…the American dream comes alive in Denmark.”

What’s Denmark’s secret, super-effective method of governing? According to Bloomberg Businessweek, the nation serves a potent recipe of high taxes, plentiful social aid and a well-organized public sector. For instance, the cost of health care is paid for by the Danish government rather than its citizenry. Additionally, employers are encouraged to provide training to strengthen the employee’s skillset.

For example, the Danish government focuses its spending on more socially-oriented services rather than, for example, disproportionately on the military. According to Haekkerup, the entirety of Denmark’s defense budget is the same amount that the Pentagon spends on air conditioning – an astonishing and baffling revelation regarding the pragmatics of national spending.

Due to Denmark’s combination of high taxes and high social aid, financial growth is projected to increase throughout 2014 along with a decline in the employment rate. This economic model contributes to an overall high standard of living in Denmark along with social safety nets for the less-fortunate citizenry.

Furthermore, according to NPR, the general price of goods in Denmark is staggeringly more expensive than the price of goods in the United States. However, the Danes also have more money and higher taxes. For example, according to contributor Carl Hughes, a bag of candy at a Danish grocery store may cost a pricy $5, however, a large bag of locally-grown vegetables may cost a more reasonable $2, thereby encouraging shoppers to purchase the healthy, environmentally-kind bag of vegetables.

In America, this trend appears to be reversed. Unhealthy foods, such as chips and candy cost far less than fresh fruits and vegetables. Through this combination of income and taxation, Denmark utilizes the tax system in order to socially breed a more socially-conscious population.

Phoebe Pradhan

 Sources: Bloomberg Businessweek, NPR, OECD
Photo: A Thoughtful Eye