High Taxes Are Good?


It isn't very often that you hear someone argue that high taxes are a good thing. It's a little counterintuitive, which I like, but overall I'm not buying it. I think the argument mistakes a bit of correlation for causation.

The danish model, rather than hindering economic growth is more likely to be the source of it, for one simple reason: It promotes happiness at work. Working only for the pay doesn't pay and unemployment benefits are pretty good, so why should you stick with a job you don't like. And let me say this again: People are very rarely productive in jobs they don't like. This frees employees to find a different job they DO like – and no-one is more productive than an employee who truly loves her job.

He's right about happy employees. I think we are starting to see that here in the U.S. Some people will take less money in return for a higher quality of life, and that is fine if that is what they want. But I'll offer another suggestion based on my brief stint living in Copenhagen.

Denmark is a very small country, and thus has embraced trade and globalization much more so than most other countries. Plus at the high school level they are more educated than Americans. I think part of the success of the Danes is due to these factors.

Of course, as always, you are welcome to disagree with me in the comments…

  • A couple issues with the theory. First, there are surely jobs that *nobody* particularly likes–it’s easy to think of examples. Second, people often wind up in jobs they don’t like for reasons other than money–perceived social prestige, misunderstanding of what the job is all about, to mention a couple.

    I do think that, per the post above, there are quite a few people who pursue management careers despite having little aptitude for, or interest in, actually doing management work. But I doubt that higher taxes would keep them away from the field.

  • It also leaves out what I’d consider the far more plausible issue – Danish culture. They may be post-Calvinist now but the cultural Petri dish still exists there in large part.

  • Rob

    David, that’s a good point. It’s hard to believe that everyone in Denmark is just thrilled about their jobs.

    Vinod, Good to see you pop in. I think you are right about Danish culture.