01 February 2010

Buy Bicycles to Help the Economy

Screen grab from DRs 21 Søndag news programme.

The Danish Finance Minister, Lene Espersen, was on the national news last night in another attempt to sell the tax cuts the party she leads - The Conservatives - have advocated for.

She did so in a photo op at a bicycle shop with the angle: "this is how I'm spending my extra cash... I'm buying a new bicycle."

The bottom line is that it's great she was using a bicycle purchase to illustrate her point and she repeated the Conservative mantra of 'buy, consume, repeat' in the interview to underline how the economy can be boosted. She encouraged us to buy, for example, a new bicycle and create a chain of good reactions in the economy.

Hang on.... what's that underneath the bottom line? Ah... it's the small print. It tells a different story. Firstly, the Conservatives and the Liberal Party, who both govern Denmark at the moment, are not exactly legendary bicycle advocates. Secondly, the tax cuts are frightfully uneven. In the piece on the news it was revealed that the Minister will recieve tax cuts enough to buy a new bicycle every month this year whereas a cleaning lady only gets about 100 kroner a month [$20].

As one of my friends wrote on his Facebook status; "I just got a 5% payrise without having done anything to deserve and at the expense of others. Can we please have a new government?"

A protest campaign has been launched, in Danish only, about how the Prime Minister and the wealthy get loads of cash but at the other end of the scale it's just a few coins. www.skaevt.dk

At the end of the day, however, buying a new bicycle is not a bad thing. Danes buy 500,000 of them each year. I read that last year, during the brunt of the global financial crisis, three goods were most popular and enjoyed large increases in sales.

Fish [for eating]. Pets [not for eating]. Bicycles. The latter saw an 11% increase in sales.


Erik Sandblom said...

Conservative. Liberal.

When it comes down to it, they want to take your money and build roads to expand car traffic. Conservative? Maybe. Liberal? Definitely not.

kfg said...

Restore an old bike for the economy. It costs a bit more money to end with and old bike, but the shop makes more money on the bits and labor than they do on a bike; and they and the paint guy are local craftsman.

Don G. said...

Maybe he meant "neo-liberal". In any event it sounds like the conservative spin here in the US of A. They expect all the services and high quality of life (for themselves) but, they don't want to actually pay for it. Conservatives should know by now that there are no "free lunches". During my visit to Copenhagen, Malmo and Luind I had conversations with at least a dozen Danes and Swedes, not one complained about the taxes they paid and they understood that it's why they enjoy the highest standard of living in the world. Then again, none of these people were rich.

Jacob said...

Of course the wealthy get the biggest tax cuts.

What did you expect. They are paying several hundred thousand kr. in taxes. So when the taxes for example are going down by 1% they will get the biggest cut.

By the way: When the taxes are going up it will also be those with the highest income who will get the biggest tax increase. It's simple mathematics.

Nazgob said...
This comment has been removed by the author.
stuart said...

@Jacob -- well, sort of. The point of progressive taxation is that those with the advantage of more resources contribute not just more but at a higher rate, too. This is because those with less have less margin to work with. This consideration should be baseline. Any economic stimulus considerations should be independent of this -- they shouldn't work against this progressive taxation, particularly since they're likely to induce deficits that must be made up later. If they're to be permanent and revenue neutral, it's even worse, since the wealthy can use their additional funds to make up for some of the loss in public services on a private basis (e.g. gated communities) which just exacerbates the gap between rich and poor.