A short note on a passage in one of today’s editorials in Information:
Anders Fogh Rasmussen vil gå over i historien ikke alene som den statsminister, der misrøgtede økonomien og tvang Danmark ned på rangstigen over verdens rigeste lande, men også som den statsminister, der som den første kompromisløst tog økonomien som gidsel i sine bestræbelser på at bevare magten.
I would accept the argument that Fogh (and the Liberal Party under his leadership) was first and foremost office-seeking and that the economic policies of the naughties in many ways left Denmark in a worse position on the eve of the present economic crisis. In many ways, the economic policy is eerily reminiscent of the Swedish economic policy of the later 1980s which ended with a massive crisis lasting from 1990 to 1998. There were other reasons for the breakdown in Swedish economy but a lack of control of government expenses and a completely irresponsible handling of the financial markets did a lot of harm to Sweden and led to the lost decade of the 1990s. Unlike Fogh Rasmussen, Ingvar Carlsson had the decency to stay on board in order to try and sort out some of the mess himself before retiring from politics in late 1995.
But … while Information is right that Fogh Rasmussen’s predecessors Nyrup Rasmussen, Schlüter and even Anker Jørgensen did engage in policy reversals in order to stabilise the Danish economy, we should consider the case of Kulegravningsbanden, the all-party committee which in 1972 presented a comprehensive catalogue of possible cuts in public expenditures in order to stabilise an overheating Danish economy and reign in a public sector which had slid out of control, only to find its plans thwarted by prime minister Jens Otto Krag.
Sure, indications are that Krag was afraid that announcing cuts in public spending in the run-up to the 1972 EEC referendum would have turned public opinion against the EEC as the left-wing was running a “Welfare or Europe” campaign but the result stands: Danish economy overheated on a big scale, controlling public expenditure continued to be a major problem, the Progress Party gained momentum and, following the 1973 earthquake election, a succession of weak governments spent the rest of the decade and a major part of the 1980s getting the massive economic imbalances under control.
Anders Fogh Rasmussen deserves his place in the Danish Economic Policy Hall of Shame (especially as he should have known about the Swedish experiences) but he is not alone.