So, last Tuesday, I attended a very interesting lecture at the Heritage Foundation. It was given by a leading investment banker in Denmark, Lars Seier Christiansen. He is the founder of Saxo Bank. The bank still operates in Denmark, although Mr. Christiansen has since moved to Switzerland. More on that later. Yes, I know i should’ve posted this last week. I’m a blog slacker.
Morton Blackwell, one of the heroes of the fight at the Republican National Convention against Ben Ginsberg and the rest of Romney’s cronies, came out and gave a brief introduction of Lars, and told us that we were about to hear what socialism really does to a nation. He wasn’t kidding.
One of the first things Mr. Christiansen pointed out was that when you go so far as Denmark has down the path of socialism, it’s almost impossible to go back when so many become dependent on government handouts. Too many will be looking to get their ‘fair share’ of the loot, and will resist any real efforts to roll back the welfare state. He wryly obsetved that this was perhaps not the most friendly environment for an investment bank.
Next, he gave us a bit of background on his homeland of Denmark. It’s a monarchy, the oldest in Europe, with a standard Westminster-style parliament. If a party wins 2% or more, they are entitled to representation in the parliament. This creates a system where, much like many others of its type, minor parties can hold disproportionate power. There are eight parties that are represented in the parliament, so it is nearly always the case that a large coalition of parties is needed to build a majority. The worst news is that of these eight parties, only one could be described as right-wing in sense; the others express no interest in rolling back the welfare state at all.
Denmark had the highest taxes in the world, until recently being passed (barely) by Zimbabwe(!). The Danes also have the smallest private sector in the West, and one of the largest public sectors. Outstanding combination, no? As a consequence, even the most socialist politicians understand they need capitalists to generate revenue, but view them as very distasteful, sort of a regrettably necessary evil.
He also spoke about a very supervisory tone to Danish society. Hotlines where you can call and see if someone is cheating. Any payment above $1500 can’t be paid in cash. I am NOT making this up. Tax authorities wield exceedingly wide powers. For example, they can intern any kind of private property without court order, and demand documents. This is not allowed to authorities imvestigating terrorism. Most Danes actually believe that anyone who is rich and successful cheated somehow. This is due in part to the makeup of the Danish parliament. It has almost no one with any appreciable amount of practical private sector experience. Many powerful goverment ministers are under 35, and very, very far left. Only 1.8 million of almost 6 million Danes are not dependent on the government. That’s staggering. And of course, everyone scraps for any entitlement they can get, due to the insane tax rates. Only 28,000 Danes make over a million krones ($150,000 or so). Massive envy and suspicion of these people.
Tax reform and government reform efforts are largely symbolic. “Tax reform” apparently means growing the PUBLIC sector. Six of the eight parties participated in this latest charade. The absolute furthest left party supports abolishing military and police and nationalizing the largest Danish companies, of which Maersk Shipping would be the most recognizable to Americans.
Politicians have walled themselves into having to promise more and more entitlements. Blue collar voters largely support “right” parties. This has all happened since 1960, when Denmark had a tax pressure lower than Switzerland, where Lars moved a few years ago, because of the insanely confiscatory and invasive Danish government. Since 1960, things have gone horribly wrong. No party has incentive to run on a small-government rollback platform, so he doesn’t see how reforms will happen for a very, very long time. They’re uncompetitive even with other socialist EU nations, due to high wages and lower productivity. Many young Danish people are leaving, and he figures they’re on the road to where Greece is now.
More fun facts: Property taxes average 3% of the full value of your home ANNUALLY. RIDICULOUS taxes across the board. Insane green taxes. Total tax pressure for upper middle class, he estimates at 80-85%. And he doesn’t see how it can be reformed, with everyone dependent on the government. He worries that we’re (the United States) headed in this direction. He emphasizes that it is NOT a system to emulate. He thinks it will collapse Europe-wide, bit by bit. Also, Euro politicians love the US going more socialist, so they can point it out when arguing against European pro-liberty advocates. He says we need to turn it around, before it’s too late. You can turn around freedom, but not democratic socialism. He believes it’s paramount to nurture free market values at home and in schools, and that may not be possible soon. He thinks European integration has been horrible due to mandates from Brussels, and erosion of national sovereignty, as evidenced by European politicians like van Rompuy.
So yeah, let’s not do that here. The man knows what he’s talking about.