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Dec

1811:14

The halls of Reagan and Thatcher: the fight for freedom from government

 
Cepos is leading the charge for economic liberty and personal freedom. For while Denmark's economic problems are many, there is one simple cure – lowering taxes and reducing the size of the welfare state

Denmark’s foremost free market think tank Cepos lies a stone’s throw from the royal palace Amaliensborg, on a street that translates as ‘landed Count’, Landgreven. Hidden in a maze of streets, I miss the entrance and end up by the Michelin-starred restaurant Clou, where a homeless man is sleeping outside under a pile of newspapers.

“We are a policy-oriented think tank, which means that we are always thinking of ways to improve society in a manner that is sustainable and that also increases personal liberty, responsibility and economic freedom – factors that are all strongly connected to wealth and prosperity,” says Martin Ågerup, the director and founder of CEPOS who greets me when I finally find the door.

He leads me through the hallway of the office and into their main meeting room. On the way I spot a picture of Ronald Reagan depicted in the style of the iconic Shepard Fairey Obama poster. We sit down across from each other in a meeting room littered with pictures of politicians and other notable persons. As we start to talk, I notice that right behind Ågerup is a picture of him shaking hands with the late Margaret Thatcher.

In the state of Denmark
“Generally speaking Denmark has a very strong society and a strong economic model. To a large extent this is based on Denmark being a very liberal society with a lot of economic freedom,” he says. “People tend to forget that and focus on one area where we are not so liberal – the large public sector, and the taxes that follow from it, as well as the very large redistribution through the tax and welfare system.”

CEPOS’ stance on society is firmly rooted in market fundamentalism and a belief that the freer the market, the better off we all are. This inevitably places the organisation’s view on society in line with the right wing of parliament, but Ågerup is adamant that they have no ties to any of the political parties.

“I want us to continue with the process that we are already undertaking. We need to lower some of the taxes, and we should lower the average tax burden by ten percent, over the next ten years,” he says.

“We also need to make the public sector more productive. I’m not saying that public employees are lazy, but they are a part of a system that hinders their productivity and creativity. Many public employees say that they are being told too much what to do, and that there is too much bureaucracy.”

Ågerup is charming and his delivery switches seamlessly between heavy brow firmness and light-hearted humour. He has a knack for communicating complicated issues in a simple manner, and draws upon relatable analogies when dissecting topics like reforming the welfare system.

“Let’s say you went to the launch of a new smart phone. If it were equivalent to the public sector, the producer might say ‘we have made this 1000 kroner better’. But what does that mean? Then they’ll say, ‘it costs 1000 kroner more, so it is 1000 kroner better’. This is how it works with the welfare system: the politicians say ‘we have increased spending by 2 billion kroner and isn’t that fantastic?’ But what has really come out of it? We need to come away from this idea that we need to increase input to get better output.”

On immigration and labour
In recent years a split has begun to emerge between the purely economically minded right-wing, and those more focussed on culture and values. In an ideal world of free markets and personal liberties, people would be allowed to shop around for a country to settle in, while nation states competed over a workforce unbound by their country of origin.

However, as the West witnesses a revival of right wing populism, these arguments lose out to a conservative stance on immigration that seeks to keep foreigners out. The situation is no different in Denmark, and I am curious to know what Ågerup’s views on the issue are.

“All parties look at the polls and what voters are thinking. Some issues shift votes and this is one of those issues. It is true that Dansk Folkeparti (DF) and Venstre have a very strong position on immigration, but all parties have shifted their position since the nineties closer to what DF was then. Now all parties have moved their position, with certain exceptions, not just the right wing.”

Ågerup admits that CEPOS do little work on immigration, but he believes that the main problems facing immigration today have to do with the welfare system, and economic controls over the market.

“We have an inclusion problem, in that we don’t have enough entry level jobs. So the metaphor is that you have a ladder, and we need more steps on it. Currently the lowest steps are too high, so some people can’t enter the labour market. That means that people with low skills, who maybe don’t speak the language that well, can’t get employment. We need to have a lower de facto minimum wage. Right now it is around 100 kroner, but I’m not saying we should go down to 60 like in Germany, as we have a higher cost of living, but maybe 90 like in Sweden.”

Taxes and inequality
The recent debates about inequality and tax avoidance through loopholes inevitably come up, and Ågerup has a very critical stance on both issues.

“First of all, we need to think about how to define a loophole. Denmark has agreements with other countries, and corporations look at these agreements and figure out where they are best served. What do you do when you look at your taxes? You look at what you can deduct. You don’t say ‘I’m not going to deduct that because I want to give the government more money’, we don’t expect private individuals to do that, so should the CEO of a company go to the board and say that he chose not to deduct the taxes he could have done? That is not his job.”

This view on the tax debate falls very much in line with the view free market fundamentalists have on taxes in general, and Ågerup is not shy to admit that he feels that, “corporate taxes are a very bad thing”. He also believes that it is good for consumers that states compete with each other on taxes to attract corporations, as lower taxes mean lower prices on the goods and services they produce.

When I prod him on the issue of inequality, he once more draws on an everyday analogy.

“When we talk about equality we are talking about several different things. I don’t think that anyone would disagree that we want to be treated equally, in front of the law for example,” he says.

“But then there is equality of outcome. If you compare this to a football match, you want the referee to treat both teams equally. Otherwise the other team would be very unhappy and you could say that the game was unfair. But you wouldn’t say that it was an unequal result if one team was better and won the game 6 – 0, you would just say that the better team won.”

Ågerup frames the issue in terms of fairness: it is unfair to take away people’s money to give to their neighbour who earns less. The left wing’s desire to redistribute wealth, he argues, is driven by a hysterical fear of ending up like the US.

“There has been a development in the US that we have neither seen here nor in most EU countries, in which the earnings of the top one or ten percent have really taken off compared to everyone else. It is a very US specific issue, and people on the left are pretending that we have the same situation here, but we don’t. Some people like to say ‘let’s just put a tax on the rich’, but that hits a lot of people that have made their money in a very good way, entrepreneurs for example. The way I see it, if my neighbour starts earning more money than me then that is a great thing, as it increases the wealth in society.”

As our talk winds down I make a joke about the picture of him and Thatcher, which leads into a talk about his university days in Bristol in the eighties and the rigidity of the English class system. He reminisces about the Eton boys, and how people were categorised by their accents into certain types. It would seem that not even Denmark’s most dedicated right wingers can fully escape Scandinavia’s culture of class awareness.

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By Elias Thorsson

Managing editor. @Eliasthorsson elias@murmur.dk

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