The Welfare State and Freedom: A Mismatch
In order to feed the growing welfare state, Danish citizens are heading down the road to serfdom.


Jacob Mchangama

America’s looming presidential election will likely present voters with a clear choice between moving the country further toward a European-style welfare model or bucking the trend of increased public spending. This choice not only has consequences for the economic future of Americans but also for their freedom.

For a while, the success of Scandinavian welfare states seemed to disprove the notion that high taxes, generous benefits, and a large public sector inevitably lead people down the road to serfdom. Indeed, by intellectuals such as Francis Fukuyama and celebrities such as Oprah Winfrey, Denmark has been hailed as a model state, successfully combining freedom and prosperity with “social justice.” But now, the combination of a debt crisis, an aging population addicted to public welfare benefits, one and a half decades of low growth rates, and increasing competition from countries in rapid development is revealing the dark underbelly of welfarism. As a result, the friendly compassionate face of the Danish state is increasingly being replaced with intrusive measures that were unthinkable just a decade ago. It is not an overstatement to say that the balance between the state and the individual has been shifted decisively in favor of the state. A few non-exhaustive examples may help illustrate how far down Hayek’s road Denmark has gone.

It was recently revealed that Danish tax authorities have demanded that travel agencies disclose the identities of customers who have spent more than $8,000 on vacations. This information is then compared with their tax returns in order to determine whether such vacations have been paid for with undeclared income. The Danish tax authorities also have the right to demand information from telecommunications companies about when, where, and how Danish citizens have used their mobile phones. Unlike the Danish Intelligence Services, the country’s tax authorities need no probable cause or court-ordered warrant to force the disclosure of such sensitive information. In other words, a suspected terrorist has more legal protection than the ordinary Danish taxpayer. This is far from an isolated example. Currently, 235 different laws and regulations allow various public authorities access to businesses and private homes without a warrant. Public authorities also have full and unhindered access to certain retirees’ financial information, and Danish pensioners have to inform their municipality when they leave the EU for more than three months as well as when they return.

While abroad, pensioners risk being spied on by Danish “control teams,” which operate in countries such as Thailand, Turkey, and Spain in order to investigate whether Danes abroad have undeclared assets. Danes should not be surprised if they are met at the airport by an employee of the Danish Pension Agency who demands to see their boarding card as well as their social-security number. Again, no probable cause, reasonable suspicion, or warrant is required. Meanwhile, the vast majority of Danish municipalities have set up hotlines or websites encouraging citizens to anonymously inform on their neighbors if they suspect them of receiving benefits to which they are not entitled.