Ep. 6 Enough About Denmark Already: Here’s What Krugman and Sanders Left Out

23 October 2015     |     Tom Woods     |     37

Is Denmark a good model for the United States? Krugman thinks so, and claims the large welfare state there, combined with that country’s prosperity, disproves free-market claims about the impoverishing effects of heavy government spending and intervention. To make his case, Krugman has to contradict his own textbook from six years ago. It isn’t pretty, folks.

Krugman Column

Something Not Rotten in Denmark” (Oct 19, 2015)

Contra Columns

Casey Mulligan and John Cochrane Crystallize My Angst on CBO ObamaCare Jobs Estimate,” by Bob Murphy
Paul Krugman’s Intellectual Dishonesty: Unemployment Benefits,” by Jeremy R. Hammond
Danes Rethink a Welfare State Ample to a Fault,” New York Times, April 20, 2013
Krugman and Blinder: Welcome to the Supply Side,” by David Henderson

Denmark Data Discussed (Click to Enlarge)

Absolute Govt Expenditures Denmark

Deficit

Denmark expenditures

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  • Chris

    too freaking funny, excellent Podcast !!!
    Thanks Tom and Bob

  • Peter Svensson

    What is Krugmans answer on this?

    • Ichneumon Jones

      I applaud the effort, but I suspect you’d see similar statistics for “Americans living in [X]” versus “Americans living in America”.

      Expatriates are a self-selecting group and not random samples of the folks “back home”. They tend to be more motivated, more capable, the “go-getters”. It’s not surprising that they would outperform the average of the populations they moved from, even if they had moved between countries with identical economies.

  • m l

    “That the United States, when it creates rights in individuals against itself, is under no obligation to provide a remedy through the courts.”

    Take benefits, waive rights.

    U.S. V Babcock 250 U.S. 328

    Also see: Allen v Graham 446 P.2d 240

    http://caselaw.findlaw.com/us-supreme-court/250/328.html#sthash.2NAITtR1.dpuf

  • Eileen

    One of the reasons why older people are on government stipends is due a culture that glorifies youth. All the time, we hear about an older people losing their jobs to younger people. Employers do this say “older people are unwilling to learn”; the real reason is that younger people are cheaper. To stop this, we have to stop regulating the workforce, stop asking employers to pay for things that have nothing to do with wages and allow 1099 employment contracts which levels the playing field between younger and older workers.

    People will always take the path of least resistance. If it is easier to go on the dole with all the guilt that is associated with it (and there is), than to try 10,20,30 times harder against a culture where you are devalued after 45, because of inherent stereotypes about people over that age, what do you think will happen? Socialism has its appeal, especially European type socialism because it is very difficult to always strive to be the best in your field and keep that up for your entire life. It is stressful. Capitalism, with all its ability to reward productivity is a young person’s economic system. Before the advent of the euro and the European Central Banks, the European system allowed people to age gracefully. So the question to ask is it pre-euro socialism that got Europe the way it is now or is it the reckless monetary policy as executed by the ECB? If the latter, then counteracting Bernie Sanders with the reasons why socialism is bad economic policy will not resonate. People just don’t see it that way.

    Paul Krugman is not the best spokesman for socialism, for reasons outlined in this column. What has to happen is our economic system to descend into chaos and the advent of totalitarianism. It is my opinion that once the US passed a certain population threshold, it became ungovernable. And the debt had to spiral out of control. People will opt for socialism because it is the path of least resistance and like all socialist, planned economies of the past, will also fail due to the size of the debt and bureaucracy. So all the libertarians who want the return to a capitalist system are correct in their prognostication. However, getting people to understand is far more difficult, especially in a political climate where the rule of law has broken down and those at the top look the other way.

    • caso0

      I don’t get it. Aren’t the over-55 crowd (specifically the ones not yet retired) the highest earning age group statistically? I’m sure in certain segments of society you can find a story here and there (maybe niches like Hollywood or construction? ) about an older worker being let go and finding hard times because they couldn’t keep up in modern industry and it makes for juicy journalism, but I don’t buy this as the norm. If anything, older folks are faring better than their younger counterparts compared to the old days when we had a more blue collar economy. When experience, knowledge base, and brainpower becomes more valuable than braun, older people much are better off.

  • QuestionItAll

    In Socialist (communist) countries such as Denmark the Socialist model economy is certainly a large part of their problems, but it’s only part of a bigger issue. The following book speaks to this larger social issues: http://manipulism.com/

  • john smith

    so, in order to subscribe to this podcast with itunes, you have to copy the RSS feed URL into the Itunes > File > Subscribe to Podcast… dialog (where it asks for the URL). that would be helpful information to a first time subscriber – or make you link just work when you click on it (it does nothing other than bring up a page on a website that does NOT subscribe you to the podcast).
    just sayin’.

    • http://www.TomWoods.com Tom Woods

      I assure you I have never had to follow steps like that, and I am a subscriber to the show. The iTunes link takes you to our page on iTunes. From there you click “View in iTunes,” and then iTunes launches on your computer. That’s where you click the subscribe button.

      Alternatively, you launch iTunes, search the iTunes store for Contra Krugman, and then click Subscribe.

      • ralhow

        It appears to me to be a glitch within the new iOS 9.02 version iPhones where the Podcast app gets stuck on the pass off. I have also noticed that Siri no longer pauses the playback in by voice command so the actual Podcast app is suspect here.

      • john smith

        I’m sure that was your experience – I”m on a Mac using Chrome. I write software for a living for Cisco network security – deal with this kind of thing all the time – there’s always a ‘10%’ use case that fails. No worries.
        love the show BTW!!! Keep ’em coming!!

  • SMiller

    This is hilarious, I find myself smiling the whole time. Thank you guys, God bless!

  • Darren

    How come Krugman’s column doesn’t allow comments? It used to.

    • Ichneumon Jones

      For the obvious reasons.

  • Brandon Leger

    You referenced a comparison between the life in the 1950’s vs today. Smaller houses, no AC, etc… Is there a link to the data on this that compares the average households of the two eras?

  • ThierryX

    “Bruce Springsteen and Paul Krugman are wrong about the Nordic welfare state”:
    http://www.iea.org.uk/blog/bruce-springsteen-and-paul-krugman-are-wrong-about-the-nordic-welfare-state

  • Jack Sigismund

    “so called free college education with a stipend…. what a stupid way to lose money” WTF DO YOU BASE YOURE SARCASM ON?!?!?!
    – Im from denmark, and yes! there are a lot of faults in denmark, BUT to say “So called free education” just show how dumb you are!!!!! All schools except private educations/tutoring are free! And thats a good thing! in that way, we are so fortunate that the most danes are smart enough not to listen to somebody as dumb as you!
    – And then the blurring out with shit about its a stupid/dumb way to lose money?!?!?! That is a bunch of dogshit! ITS ONLY FOR THE TOP/ELITE STUDENTS! Its not like we waste our money on a student which we already know wont complete!!!!!
    – LEARN SOMETHING BEFORE TRYING TO SAY SHIT LIKE THAT! Denmark ain’t perfect at all!!! BUT RATHER THAT THEN LIVING UNDER AMERICAN CORPORATIONS “goodwill”!!!!
    BTW; I’m a liberal! and even i can see the how much shit america is!!!

    #PreachingSOB #DumbFUCK #SoAmerican #TypicalAmericans #YouNeedEducation #StartDonatingMoneyToThisUnEducatedMorron
    Best of luck on the learning – Denmark OUT 😉

    • dagny

      Wow! Tell us how you really feel. I think the point is that nothing is “free.” It may be free to you, but actual working fellow citizens are financing it on your behalf by your government’s forceful seizure of the results of their labor production. Ultimately, the very definition of freedom is owning one’s own labor. Thus, “free education” (along with any other government provision, for that matter) is made possible through the government’s enslavement of others for your direct benefit.

      • caso0

        If that rabid drivel post was any indication of the quality of Danish schooling, then Mr Woods has been vindicated. I think your common sense and fact-based reasoning went way over his head.

        • Jason

          Can you speak Danish? Get back to me when you can. Most Americans can barely speak English properly, let alone another language.

          • caso0

            Nope. I can’t speak Danish, but who cares? Is that a required skill for identifying poorly constructed arguments based on nothing more than emotional appeals? Odds are you’re some American college sophomore who just finished a semester of a Danish language class so now you think you have the whole world figured out.

      • Jason

        Nobody thinks of a shared taxation system as enslavement, except for the most extreme of capitalists. Nobody is buying what you’re selling, truly. Boohoo — here’s a tissue.

        • caso0

          There’s nothing in the tax system that involves “sharing”. Involuntary “sharing” (by force) goes by another name, “theft”. Are you in the camp of Marxist anti-intellectuals who cry that “profit is theft” and “wages are slavery”?

        • Screamin_Ruffed_Grouse

          I consider a preemptive claim on legitimately earned income, at a rate determined entirely by the collecting party, to be spent entirely at the discretion of the collecting party, with the liable party facing the threat of violence from the collecting party if they don’t pay, to be as close to slavery as you get without bringing out the whips.

    • Torqueville

      What is claimed to be “free” is tax funded. And since taxes are not voluntary…

    • Luke Perkins

      “Denmark OUT ;-)”

      Good riddance.

    • AndreasDK

      I am also a Dane and unlike my countryman, who wrote the above nonsense I am aware that there is no such thing as free education – you either finance it yourself or coerce other to do it for you through taxation.

      Without going too much into detail about the Danish education system, I can tell that the socialized education model has left its mark on a school system that actually used to rank among the highest in the world: Standards in both elementary and high schools are lax (bar the precious few semi-privatized institutions) and universities are competing against each other on creating programmes with catchy names but with questionable academic content in order to attract students, because funding is solely based on the number of students signing up for a given school year.

    • vimfuego

      I am also from Denmark. This guy is a good example of the kind of idiots our “free” education system results in.

      There is a danish libertarian called Ole Birk Olesen, who has written a book called “Taberfabrikken” (The Loser Factory) – which refers to Denmark – and describes how Denmark was extremely libertarian only 60 years ago with lower taxes than the US. This is what made the country rich. But ever since the introduction of the welfare state it has gone downhill.

      Only around 30% is working in the private sector, the rest is either on welfare or employed in the public sector.

      Typically the tax rate is around 70-80% for a working person. 50%+ in income tax, 25% sales tax, 2% tax on your house price every year, 180% tax on cars, etc.

      As a productive dane, starting my own successful company, I naturally decided to reloacte to Switzerland. Most rational productive people leave the country if they can, and certainly if they are starting a company.

      It has been 25+ years since a company was started in Denmark, which resultet in more than 1000 employees.

  • dagny

    HI, please entertain a general comment unrelated to this episode. While I eagerly anticipate this weekly content, for some reason episodes 2-4 generate an error “EPISODE UNAVAILABLE This episode is temporarily unavailable from Contra-Krugman.” All episodes download on schedule into my podcast feed. However, I’m without explanation for why 2-4 are inaccessible, unless it’s on your side. I mention it in the event other listeners are similarly constrained. Otherwise, great job on those I have been able to listen to! Very enjoyable!

  • CharlesWT_TX
  • CharlesWT_TX
  • derek jones

    Why is Denmark so happy? Are they really ‘so happy’?

    http://www.opposingviews.com/i/society/worlds-happiest-countries-take-most-antidepressants

    Really Tom, you should bring this up.

  • Stephen Youmans
  • Jeremy Michael

    I’d just like to state that Denmark has a 25% VAT tax, not a sales tax. It may not be extremely relevant, but just in case 🙂

  • Kristian

    Bob/Tom do you guys prefer heritage to Fraser? If so why?

  • John C.

    Excellent podcast. Good Austrian insights. Economies aren’t laboratories. You can’t control for one variable, run the test, control for another variable, run the test again, etc. So without using some kind of theoretical framework, economists just resort to their own favorite post hoc ergo propter hoc.

    I’m really enjoying Contra Krugman.