Is Denmark the new American dream?

In 1872, John Gast captured the American dream in his painting “American Progress,” in which the US is famously depicted as a woman holding a book, bringing light from east to west, leaving a strand of telegraph wire in her wake:

If a great painter tried to depict America today, things might look a bit different. Maybe Elon Musk lording over a land of Uber Eats drivers enduring structurally deficient bridges, storms of medical bills and crowds of pedestrians endlessly scrolling on their iPhones? Yes. And why is there such bad cell reception in this painting?

There are many reasons Americans are getting fed up with the land of the free, home of the brave and all its expensive gimmicks. So some people decide to book a one-way flight to a country with better health care, free education and a social safety net that would make Bernie Sanders drool. One such individual took to Reddit this week, certifying that his decision to move to Denmark was the best one he’s ever made:

I moved from the US to Denmark and wow

• It legitimately feels like every single job I’m applying for is a union job
• The average salaries offered are far higher
• About 40% of income is taken out as taxes, but at the end of the day my family and I get free healthcare, my children will GET PAID to go to college, I’m guaranteed 52 weeks of parental leave (32 of which are fully paid), and five weeks of paid vacation every year.

The new American Dream is to leave America.

The post has since received nearly 75,000 upvotes, and no wonder. Denmark has a pretty solid track record for being one of the world’s happiest nations. Most recently, it landed at second place on the World Happiness Report, right behind Finland. America, on the other hand, ended up in 16th place.

But the happiness test has its flaws, notes Virginia Postrel. In fact, the US’s abysmal performance could be a healthy  thing. The ranking measures contentment and complacency while penalizing imagination, opportunity and ambition — arguably the pillars of the original American dream. Noah Feldman is in firm agreement, writing that “ranking happiness like a medal count at the Olympics makes little sense” because each country has “different ideas about what constitutes human flourishing or thriving.”

So is life actually that much better in the birthplace of Hans Christian Andersen? We took a look at some key data points to find out whether there’s anything rotten in the state of Denmark.

Average Salaries and Inequality

First up? Paychecks. On average, Americans earn nearly $70,000 a year. Danes are a bit further down on that scale at about $59,000. But what difference does that $11,000 make?

Keep in mind that these are averages, which don’t always tell the whole story. Behind America’s high average is a broad spectrum — from billionaires to people working two jobs while living below the poverty line. The Gini index, measuring income inequality, puts the US on a par with China, Mexico and El Salvador. In Denmark, the gap between the rich and the poor is incredibly small — nearly everyone is able to make a satisfying wage, no matter their occupation.

At first, Covid threatened to make America’s inequality worse, and now rising prices will continue the trend by invoking a K-shaped recovery. Conor Sen explains that while soaring home equity and fattened savings are a boon to those at the top end of the wage scale, higher prices will squeeze renters at the bottom. Likewise, Teresa Ghilarducci points out that the US’s federal minimum wage of $7.75 is, in real terms, at its very lowest because it’s fallen so far behind inflation. Workers at the bottom need a raise — now.

All of this doesn’t even touch on the racial inequity that has left no part of American society unaffected — from buying homes to getting jobs and building wealth. That said, racial discrimination is being seen as a growing problem in Denmark, too, as acts of aggression against people of color and controversial immigration policies draw attention to the issue.

Part of the reason Denmark is so equal, income-wise, is down to its strong social safety net. It is, after all, a much smaller nation, which makes funding it a bit easier. But it definitely helps that Denmark has way higher taxes, too. 

Taxes

If you hate taxes, Denmark might not be for you. More than half of the government’s revenue comes from taxes, with especially hefty ones on goods and services. The top statutory personal income tax rate for Danes is 55.9% — which kicks in at just 1.3 times the average salary. For comparison, in the US you’d pay the top rate of 43.7% if you were earning 8.8 times the average.

Maybe there’s a case for the US taking an approach more akin to the Danish. Matthew Yglesias suggests taxing the rich could help fight inflation and shrink the deficit. By taking money from the pockets of millionaires, it’s possible to suck demand out of the economy and lower prices in a way that leaves most people’s incomes alone.

Health Care

Whereas Denmark, and much of the Western world, has free health care, the US doesn’t. There’s not even federally mandated paid parental leave — the US is the only high-income nation not to offer it — meaning many Americans have to choose between looking after their newborn and earning a living. Joia Crear-Perry points out that, despite spending more than $111 billion on maternal and infant health care per year, the US ranks last among high-income nations in maternal mortality rates. Maybe there’s a connection?

It’s a pattern seen throughout the OECD. The US spends a huge amount of money on health care per capita — almost twice as much as Denmark — yet Americans have one of the worst life expectancies in the developed world. What gives?

Part of the problem is that Americans pay almost four times as much for drugs as citizens of other developed countries. Take, for example, insulin. More than 10 million Americans rely on the drug, but it can cost many hundreds of dollars a month, leading some people with diabetes to make deadly decisions such as rationing, or forgoing treatment altogether. There are several efforts aiming to reduce the cost of medicines, writes Lisa Jarvis, including from Mark Cuban, President Joe Biden and a nonprofit startup. All have potential, but the nonprofit might work the best.

College Costs

The other major life cost is education. On Reddit, the expat claimed that not only will his future children get to go to college for free, but they will also get paid for it, a brag that is actually true. In the land of rye bread and pristine bicycle lanes, the Statens Uddannelsestøtte, or SU, has helped generations of Danish students stay financially afloat during their formative years. The limited income support comes directly from the government, which helps lighten young people’s lodging and food costs while they are at university.

In the US, college costs couldn’t look any different. Shuli Ren writes that in the 2019-20 school year, average tuition, room and board for a nonprofit four-year private college ran $48,965 — a 130% jump from 20 years prior. For Gen Z, out-of-control inflation and exorbitant tuition prices could create a financial headache that no collegiate education can fix. Rachel Rosenthal says that rate hikes will only exacerbate the situation.

In a country with a national college completion rate of 60%, many wonder whether it’s even worth it. In a Q&A between Romesh Ratnesar and James Kvaal, it’s clear that there’s a lot of work to be done to restore public trust in higher education. Maybe it’s time for America to follow the Danish way and make college tuition free for all — a policy that Noah Smith believes would help remake the US economy.

At this point, American readers might be wondering how, exactly, they can jump ship and move to Denmark. The author of the Reddit post said he married an EU citizen. So if you happen to find that special someone abroad, let’s hope that your wedding won’t put you into debt first.

Disclaimer: This article first appeared on Bloomberg and is published by special syndication arrangement.