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ECONOMY

Material wealth makes Americans more idealistic than Danes

In America things are not only bigger, but better. So says Henrik Fogh Rasmussen, the son of the former Danish prime minister, after 14 years of living in the United States.

Material wealth makes Americans more idealistic than Danes
"Material wealth is often a necessary condition for more idealistic pursuits," the author says. Photo: Colourbox
Ronald Reagan once said that if he could only get in a helicopter with Mikhail Gorbachev and fly over the United States, he would be able to turn the Soviet leader away from communism: “He would see how Americans live in clean and lovely homes, with a second car or a boat in the driveway.”
 
Reagan may have been naïve in his belief that he could change the mind of the Communist leader, but he was right to focus on the huge difference in living standards between the United States and the Soviet Union. Material living standards are not simply an indicator of wealth; they are also a great measure of the level of idealism and goodness in a society. 
 
Since moving to the United States 14 years ago, I have often been struck by the endless examples of much higher living standards in the United States than in Denmark: Bigger houses, bigger cars, bigger grocery stores. And not just bigger – better, too, with a greater variety of goods for consumers to choose from. For instance, fresh and organic foods are much easier to come by at a decent price in the United States than in Denmark.
 
Earlier this spring, the World Bank quantified this difference in wealth. Drawing on data from 2011, the Bank estimates that so-called actual individual consumption (AIC) in the United States is $37,390 compared to $26,288 in Denmark. This is a difference of 42 percent.
 
AIC measures the value at purchasing power parity of goods and services consumed by each citizen in a given year. Importantly, the number takes into account the value of government-provided services. The large welfare state benefits in Denmark are thus included. AIC is widely accepted as one of the best measures of actual living standards. So, according to the World Bank, living standards in the United States are 42 percent higher than in Denmark.
 
One might object that life is not all about material wealth. As Robert Kennedy once put it, “the Gross National Product does not allow for the health of our children, the quality of their education or the joy of their play. It does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials. It measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country, it measures everything in short, except that which makes life worthwhile.”
 
Fair enough. But does anyone really believe that lower material living standards improve your odds of pursuing the things that really matter in life? Material wealth is often a necessary condition for more idealistic pursuits. To take an obvious example: Think of all the free time that modern amenities such as washing machines and dish washers have created. While some people choose to waste this time, others invest the extra time available to them in playing with their children, volunteering, or putting extra hours into worthy professional pursuits.
 
Being an idealist is a lot easier in a society with a high standard of living. Perhaps this is why Americans tend to be more idealistic than Danes in my experience.
 

Henrik Fogh Rasmussen

Henrik Fogh Rasmussen is an Illinois-based communications consultant and the son of Anders Fogh Rasmussen, the former Danish prime minister and current secretary general of Nato. This opinion article was previously published in the Danish-American newspaper Bien.

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ECONOMY

How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.” 

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