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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Inequality Among Naturals



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At some point I need to write about Max Chafkin’s slightly problematic take on Norway for Inc. magazine, but for now I’ll make a quick observation. As Matt Yglesias observes, Denmark has a very free economy:

I was struck to learn recently that a Heritage Foundation / WSJ op-ed page survey decided Denmark has more “economic freedom” than the United States of America. Well, it also has taxes as a much higher share of GDP, much less inequality, stronger labor unions, and it’s dramatically “greener” in terms of per capita (or per unit of GDP) carbon emissions. It seems to me that all things considered, progressives would gladly make the swap. And apparently conservatives would, too.

Speaking only for myself, I wouldn’t take the swap. There are many virtues to Danish political economy, and the country’s long-serving former prime minister was an eccentric extreme libertarian, a description I’d happily embrace. But in light of the pattern of brain circulation within the European Union, it’s worth considering whether Danish inequality looks different if we look at all individuals born in Denmark. Many of Denmark’s highest earners live in London and even in Sweden, where the tax burden is slightly lower, not to mention a wide variety of countries. This isn’t necessarily a bad thing for the Danes. Brain circulation redounds to the benefit of Denmark in many ways — by improving the flow of ideas in and out of the country, etc.

The United States also sees a fair amount of brain circulation, but my guess is that it is somewhat less common for income-maximizing U.S. born individuals to spend the bulk of their prime-age years working in countries with a lower tax burden. And my guess is that this is beneficial in its own way, e.g., agglomerations of rich people might improve the quality of high-end consumption, driving the creation of novel experiences, enabling artists and other creative professionals to make a living doing highly specialized work (e.g., trapeze artists, experimental fiction writers, etc.).

I often think of the U.S. as creating cultural public goods for the world. Our agglomerations of the rich are a big part of it. London deserves credit as well on this front. None of this is to suggest that we shouldn’t have more redistribution. My skepticism towards dramatically increasing the amount of redistribution we engage rests on other arguments. But it is something to think about, and, I’d suggest, something we should be proud of.



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