Economists on Denmark

Economist Dani Rodrik excerpts from economist Robert Kuttner’s (subscription only) article about the transferability of the Danish economic system with interesting results.

Does Denmark have some secret formula that combines the best of Adam Smith with the best of the welfare state? Is there something culturally unique about the open-minded Danes? Can a model like the Danish one survive as a social democratic island in a turbulent sea of globalization, where unregulated markets tend to swamp mixed economic systems? What does Denmark have to teach the rest of the industrial world?

These questions brought me to Copenhagen for a series of interviews in 2007 for a book I am writing on globalization and the welfare state. The answers are complex and often counterintuitive. With appropriate caveats, Danish ideas can indeed be instructive for other nations grappling with the enduring dilemma of how to reconcile market dynamism with social and personal security. Yet Denmark’s social compact is the result of a century of political conflict and accommodation that produced a consensual style of problem solving that is uniquely Danish. It cannot be understood merely as a technical policy fix to be swallowed whole in a different cultural or political context. Those who would learn from Denmark must first appreciate that social models have to grow in their own political soil.

Both Kuttner and Rodrik conclude that while Denmark’s model is not easily transferable, the ideas there are too important to be dismissed by the US.  What is most interesting about this is that while Kuttner is a liberal, Rodrik is more center-right.  Worth reading Rodrik’s post at the least.