The welfare state’s greatest threat is middle management

Liberal Alliance’s ‘de-bureaucratisation’ spokesperson Henrik Dahl wants to trim Denmark’s administrative fat. He thinks its possible to reduce the size of the public sector without worsening education and frontline services, but opponents see it as a ruse to cut taxes

“Kafkaesque” is how Henrik Dahl describes the public sector. The former sociologist is now an MP for Liberal Alliance (LA), whose party has diagnosed the state administrations with extreme bloat – burdened by the weight of committees, rules and administrators. Radical surgery is the only remedy.

Dahl is the first ‘de-bureaucratisation’ spokesperson in Parliament, tasked with identifying areas of wanton or needless spending. It’s a central mission for his libertarian and small government party, which imagines a lower tax and a wealthier Denmark.

Dahl’s background in Sociology enables him to draw heavily on theory to illustrate why public administration has, in his view, become unsustainably bloated. He says it all boils down to modern interpretations of Parkinson’s Law, an adage originating from a 1950s essay by former British civil servant Cyril Northcote Parkinson, which holds that bureaucracy creates yet more bureaucracy.

Henrik Dahl, MP for Liberal Alliance /  Peter Stanners. 

Henrik Dahl, MP for Liberal Alliance /  Peter Stanners. 

“You see this mechanism in operation every day in Denmark – for example, 3,900 public sector jobs are being relocated,” he says, referring to government plans to boost nationwide growth by pushing government jobs outside of the capital. “In response, local councils are setting up special branches to welcome the new recruits. Imagine that!”

He argues that excessive administration is a product of a flawed system that protects the interests of civil servants. Denmark’s class of highly-educated individuals has created a class of bureaucrats who keep adding layers upon administrative layers to keep themselves occupied.

“The ruling class wants high wages, pleasant working conditions, to escape physical work – and it looks after itself. It demands that we educate more people.”

Less bureaucracy, less tax
LA have a plan – the ‘2025 plan’. They argue that it is possible to cut 10 percent of public spending without diminishing the quality of services. In exchange we would pay less taxes, strengthen the economy and lower unemployment. Opponents argue that cutting public spending would still disproportionally hit the most vulnerable, but LA have a trump card. The entire plan has been vetted by the Finance Ministry and follows the recommendations presented by the former centre-left government’s Productivity Commission. By cutting bureaucracy, they argue, more resources are freed up for spending on core welfare such as elderly, child and home care.

But not everyone within the party agrees exactly where the fat should be trimmed. A 2014 reform to reduce the number of university places in humanities departments – due to the lower employment prospects of graduates – was hotly debated. LA’s education spokesperson Merete Rissager approved of the former government’s move.

“It isn’t fair to ask others to pay for an education, which functions as a sort of occupational therapy or a hobby for years, but which will never be used for anything,” Riisager wrote in Ræson.

In contrast, Dahl’s academic past means he doesn’t take to the issue with the same degree of ruthlessness as the former Social Democrat (Socialdemokraterne) government behind the reform. “There is nothing wrong per se with humanities. The Odyssey has to be translated into Danish once in a while – you need people who are capable of doing things like that, people with a deep understanding of languages.”

Dahl, however, still thinks that savings can be made within the higher education sector.

“So many university structures are superfluous –HR departments, meaningless documentation and fairly meaningless outreach programs which are absolutely unimportant,” he says, adding that he supports the government’s plans to cut 3.3 billion from the higher education budget over the next three years. “You have to make these cuts to avoid protecting the irrational production structures embedded in the universities. They won’t be eliminated unless you put them under pressure – which you have to do.”

Anti-bureaucracy Alternative 
LA isn’t the only party demanding a scaling down of public administration to stimulate economic growth. Across the political spectrum, the new green and pro-entrepreneurial party The Alternative (Alternativet) have also made de-bureaucratisation a key policy issue.

“I think everybody agrees that we have to tackle bureaucracy, but we don’t feel that enough has been done,” says Josephine Fock, Alternativet’s economy, justice and taxation spokesperson. Their focus on de-bureaucratisation as a key policy concern was made clear in the party’s opening speech to parliament in September: “We agree that we need more entrepreneurs and the public sector needs to cut red tape […] the public sector is tangled up in a straitjacket, which limits employees in carrying out their work,” Fock said at the time.

But while LA want to use the savings from a streamlined public sector on tax cuts, Alternativet wants increased investment in environmental initiatives. “We see the public sector as the engine behind the creation of environmental infrastructure,” says Fock. “Our main goal is focussed on sustainable growth.”

Like LA, Alternativet want to tackle bloated university structures. Carolina Maier, the party’s education spokesperson, argues that the problem is overregulation of higher education.

“Copenhagen tops the list of bureaucratic universities in the Nordic countries. 50.4 percent of the staff are non-scientific staff, which is way too much,” she says, adding that reducing university bureaucracy shouldn’t involve draining funds out of higher education, but rather managing their existing budgets more effectively.

“We don’t think that we should cut resources to the universities. On the contrary, we are very concerned that the present government is cutting research budgets. We just need to make sure that the resources are spent on research and education, instead of on administration.”

Alternativet also want to cut administration costs in public health care in order to rechannel funds toward the employees who work directly with patients. Hours now spent on paperwork could easily be freed up, argues Fock.

“But contrary to LA, we want to use the money that is liberated from cutting unnecessary bureaucracy in the public sector, to strengthen the delivery of services,” says Fock, adding that renewed confidence in the public sector is vital.

“We don’t want to over-document every process. Rather than seeing public servants endlessly fill out forms, we must have the confidence that public employees are using their time to carry out their professional abilities.”

Bureaucratic or effective? 
The clamour to shrink the public sector assumes that Denmark is too bureaucratic. But Peter Hummelgaard Thomsen, employment and taxation spokesperson for the Socialdemokraterne, argues that the issue is exaggerated and that the government already has mechanisms in place to uphold administrative efficiency.

“For over 10 years there has been a demand for efficiency performance within the public sector. The annual budget places a cap on how much local authorities are allowed to spend, and then there’s a demand to streamline efficiency by two percent each year.”

He does acknowledge that it is problematic when an increasing share of government resources are spent on management positions, rather than staff who actually deliver services.

“On the one hand we cut down on the people delivering the public services, such as nurses and teachers, and on the other hand we keep hiring people to ensure that the work is done correctly. That’s very asymmetrical – we have too little confidence in the welfare services we put out.”

Research by KORA, the Danish Institute for Local and Regional Government Research, dispels the myth that public administration costs are spiralling out of control in the local councils.

According to their research, council spending has dropped over the past seven years, primarily because of the 2007 structural reform that reduced the total number of councils from 271 to 98.

“Since 2007, spending has declined in the merged municipalities, while spending among the others has remained quite stable,” says KORA economic researcher Kurt Houlberg. “Overall, there has been a decrease in expenditure.”

“And besides the spending on public administration itself, since 2009 we’ve seen overall spending in services like culture, education and daycare decline,” he says.

Similarly, the majority of the public sector is actually self-financing, according to the project Danmark 2030, a recent report released by the Danish Confederation of Trade Unions (LO) together with the Economic Council of the Labor Movement (AE). It defines ‘self-financing’ in terms of the public sector’s cost versus how much it gives back in terms of a larger labour market, which then pays more in taxes.

“While the public sector is portrayed by certain parties as a bottomless box, into which money is poured, we find that’s simply not true. Right-wing politicians and companies know full well that without a functioning and efficient public sector, no private business will function optimally,” Per Christensen, chairman of the union 3F, told Information newspaper in April.

The ‘Rule State’
A recent book is also challenging the claim that the Danish public sector is tangled up in a complex web of overregulation. In The Rule State – growth in Danish laws and regulations 1989 – 2011, political science researchers Mads Leth Felsager Jakobsen and Peter Bjerre Mortensen argue that there’s no evidence to suggest that rules are begetting yet more rules.

After collating all national, primary and secondary legislation passed between 1989 and 2011, they found that the increase in rules and legislations has been far more modest than is often claimed. “Analysts have gone so far as to say that we get up to 300 new laws per year, and several hundred executive orders,” says Bjerre Mortensen. “The reality is that on average, laws have increased by nine or ten per year, and we get approximately 70 new executive orders per year.”

They also argue that critics don’t account for the fact that new laws and regulations are often introduced to replace existing ones, which doesn’t lead to an overall increase in the number of laws.

The book does confirm the international trend that regulations increase under governments that invest heavily in the public sector. In Denmark, right wing governments have characteristically regulated less than centre-left governments.

But Mortensen also explains that LA’s preferred strategy of privatising and liberalising public services, would actually result in a higher degree of regulation.

“LA forget that when you want to create a private market, that requires a lot of rules, which need to regulate every aspect of the market to ensure it functions. You can see it in the energy market – originally it functioned under a state monopoly and when it was liberalised in the 1990s the number of rules just exploded. Internationally this also tends to be the case.”

The two authors offer a different account of Dahl’s claim that bureaucracy begets bureaucracy.

“Deregulation activities have been seen as something apolitical, and our main point in the book is that it’s actually a political question. Rules are inherently political, they give rights to some people and they distribute values,” says Bjerre Mortensen.

“This idea that stupid regulations must be eliminated is an illusion, what’s actually taking place in this deregulation discussion is a political battle.”

Too much tinkering? 
When the surgical knife is applied to the public sector, there’s inevitably a risk of botching the operation and undermining core welfare services. At what point can you ensure sufficient staff to maintain workloads, and guarantee that the money saved is worth the resources stripped? That’s Thomsen’s concern.

“We are at a point where we need to consider whether these proposed public cutbacks are actually good for the sector,” says Thomsen.

Peter Hummelgaard Thomsen, the Social Democrats’ employment and taxation spokesperson.

Peter Hummelgaard Thomsen, the Social Democrats’ employment and taxation spokesperson.

He points to the fact that Denmark’s welfare model is internationally praised and worries that an exaggerated anti-bureaucracy debate may dismantle an irreplaceable public good.

“Sanders gives Denmark a lot of credit for the fact that we’ve succeeded in creating a society with high equality and growth,” says Thomsen, referring to US presidential candidate Bernie Sanders’ praise of Denmark’s welfare model in last month Democratic Party primaries. “It’s proven to work.”

Thomsen also disputes suggestions that public administration hinders the country’s economic development. “The Danish Council of Economic Advisors has said that the Danish economy is in good shape – while we’re struggling in the aftermath of the financial crisis, we’re still in a fairly good situation compared with most other countries in Europe.”

For Thomsen, the debate ultimately serves to obscure the critical role played by civil administration in securing Denmark’s high standards of living and welfare support.

“We have a tendency to forget the strengths of a strong public sector – what it does for a viable social safety net, how it helps to invest in future generations and the transition to a green economy. You also have to consider its economic effect – when we have a crisis, the public sector offers an airbag against financial relapse. I don’t think that the public sector is too large, and I don’t think that is the biggest concern at the moment.” M

Features, News

By Lena Rutkowski

Politics & Society Editor. Lena is a journalist and translator from Australia. @Lenarutski

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